Worcester Business Journal

42 Worcester Business Journal | August 25, 2025 | wbjournal.com I n my work advising small and midsized business owners on business selling and due diligence, one truth stands out: Most owners wait too long to prepare for the sale of their business, and it costs them. Whether your exit is 10 years away or completely unexpect- ed, being exit-ready isn't just good planning, it's good business. A well- run, profitable company might lose potential value simply because it wasn't ready when opportunity knocked. According to the Exit Planning Institute, 70–80% of businesses that go to market never sell, mostly due to lack of preparation and owner dependency. What is exit readiness? Exit readiness is your business's ability to be sold or transferred smoothly at a fair or premium valuation without major disruptions. It requires more than just profitability. Buyers look for a business that is financially transparent, operation- ally systematized, and not overly reliant on the owner. Even if you never plan to sell, building toward exit readiness improves efficien- cy, reduces risk, and increases strategic options including succession, partner- ships, or capital raises. Why most businesses aren't ready Owners are oen too close to their op- erations to see what buyers see. ey as- sume a strong profit-and-loss statement or loyal customer base is enough but overlook deal-killers like undocumented processes, uncleaned financials, lack of preparedness, personal expenses in the books, or lack of a second-in-command. Here are common oversights in the lower middle market due diligence: • Owner dependency (no business continuity without the founder) • Unreliable financials (cash-basis books, missing reconciliations) • Key-person risk (one major client or employee drives the business) • Legal gaps (missing contracts, intellectual property issues, informal agreements) Each of these lowers value and makes closing a deal harder. The exit readiness checklist A simple readiness framework helps owners assess their business across four key dimensions: 1. Financial hygiene • ree years of accrual-based, clean financial statements • Separation of personal and business expenses • Accurate tax filings, payroll records, and reconciliations 2. Operational systems • Documented business policies, also referred as standard operating proce- dures • Cloud-based tools for sales, accounting, custom- er, and vendor manage- ment • A business operat- ing with minimal owner involvement 3. Strategic positioning • Clear customer segmentation and growth strategy • Low revenue concentration (no single client >25%) • Up-to-date contracts, licenses, and legal compliance (like sales tax) 4. People & leadership • A capable second layer of manage- ment • Defined roles, employment agree- ments, and retention plans • Company culture and team stability Even addressing 60–70% of this list gives owners stronger leverage. Getting started Exit readiness isn't a single project, it's a mindset. I recommend owners conduct an exit audit annually. Many business- es partner with a certified professional accountant or M&A advisor to review books, uncover risks, and improve reporting. In many cases, a quality of earnings analysis is performed, which is a dili- gence-grade financial report that not only impresses buyers but reveals operational blind spots owners didn't realize existed. Exit-ready businesses can command 20–30% higher valuations, as they reduce perceived risk and build buyer confidence. Final thought You don't need to plan your exit tomor- row, but you should be ready if tomorrow forces your hand. In today's market, exit-ready businesses command stronger valuations, attract more buyers, and offer their founders real freedom of choice. Krishna Abburi is senior - transaction advisory services at Citrin Cooperman Advisors, which has a Worcester office. W CALL FOR NOMINATIONS! TO NOMINATE: wbjournal.com/healthcareforum Presenting Sponsor: Corporate Sponsor: CHAMPIONS OF Health Care CHAMPIONS OF Central Mass Champions of Health Care Awards This special awards program will recognize those in the healthcare field who are excelling in helping others, promoting innovation or improving access to care. We aim to shine a light on our region's healthcare champions and tell their story. The Worcester Business Journal is seeking nominations for outstanding leaders in the healthcare industry who are the epitome of a Champion. Whether they are companies, doctors, nurses, specialists or managers, working on the front lines or behind the scenes. We want to hear about those who go above and beyond to provide pivotal support and make significant contributions to keeping us and our community safe and healthy throughout the year, and during challenging times. Please join us in nominating, thanking and celebrating our community's everyday champions. Honorees will be announced in our December 1st edition and recognized at a special celebration during our annual Central Mass Health Care Forum. NOMINATION DEADLINE: September 12, 2025 How exit-ready are you? A framework for building value before you sell Guest Column By Krishna Abburi

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