When a shareholder decides to sell, the first thought is almost always price. That is natural. But price is decided long before the first meeting with a buyer, in a stage nobody sees: preparation.
The rule is simple. Every problem the seller does not solve before going to market, the buyer solves afterwards. And charges for it. EBITDA that the financial statements cannot support, a key contract without a signature, a management team that depends on the owner for every decision, a labor contingency nobody quantified. Each of these surfaces in due diligence and turns into a discount, an escrow or a condition precedent that delays closing.
The four axes
In our experience, preparation concentrates on four fronts, each with its own realistic timeline. The quality of financial information takes six to twelve months: auditable statements, normalized EBITDA, reconciliations between accounting, tax and management figures. Owner dependence is the slowest, twelve to eighteen months, because it requires the company to work without the shareholder. Contracts and concentration, six to twelve months: concentrated customers and suppliers, verbal agreements, change-of-control clauses. And contingencies and compliance, six to eighteen months depending on the sector.
The arithmetic
In a representative case of a mid-sized company in Ecuador, around USD 500 thousand invested in preparation over twelve to eighteen months avoided close to USD 2 million in discount on the final price. Four to one. And that ratio does not include the value of reaching closing instead of watching the deal collapse halfway through due diligence, which happens more often than anyone admits.
Preparation does not discover problems; it solves the ones you already know.
That is the hardest part to accept. You already know what the issues are. Preparation is not an endless diagnostic exercise; it is deciding to solve them now, while they cost work, instead of later, when they cost price.
Andrés Proaño · Managing partner, Axioo Financial Consulting