The Exit-Readiness Teardown

The method is public. The value is running it on your data.

Brokers hide their process because there is not much to hide. This page is the full examination: every domain, every check, every score definition. Read it before you ever speak to me. An owner who knows the method walks into the audit asking better questions, and a buyer who reads it learns nothing they would not check anyway.

The scoring spine

Every line item gets a Buyer-Confidence rating from 1 to 5.

The score records one thing: what a buyer does when they find the fact.

Score	Meaning	What a buyer does with it
5 · Institutional	Runs like a company, not a person	Takes it at face value
4 · Strong	Minor gaps	Quick confirmation, no price impact
3 · Adequate	Diligenceable but will be probed	Questions in the data room
2 · Weak	Material risk	Triggers repricing, earn-out, or escrow
1 · Red flag	Value killer	Deal-breaker or heavy discount

Two scores, never blended

The Exit-Readiness Score

How sellable the business is

The five company domains averaged, with Quality of Earnings and Owner-Dependence weighted highest because they kill the most SME deals. This score is yours to change.

The context read · Domain 0

Which way the tide is running

Scored separately, on purpose. A sellable business heading into a headwind still sells. Context sets the price ceiling and the timing, not the sellability, and averaging the market in would only hide it. The monthly outlook is this domain, published.

The examination

One context layer. Five company domains.

Each domain answers the same four questions: what a buyer examines, what moves value up, what moves it down, and what good looks like for an online business.

DOMAIN 0 · CONTEXT

Macro & sector

Which way is the tide running? The same company commands a materially different price depending on the cost of capital, the sector’s multiple, and who is buying this year.

Value upCheap capital and real buyer appetite in your size band. An active consolidation wave, because competing buyers are the best thing that can happen to your price. An AI-resilient position.

Value downTightening capital, multiple compression flowing down from public comps, structural sector decline, and dependence on a single platform’s policy: one app store, one ad network, one API.

What good looks likeAn owner who reads the cycle, times the process to it, and can say plainly why the business sits on the right side of the sector’s secular and AI trends.

DOMAIN 1 · FINANCIAL

Quality of earnings

Are the profits real, recurring and clean, or an illusion that evaporates under accrual accounting?

Value upAccrual books with a monthly close. Stable or expanding margins, tracked in basis points. A clean, documented normalised-EBITDA bridge. Predictable cash conversion.

Value downCash-basis bookkeeping. The owner’s car, travel and family payroll tangled into the P&L. Lumpy project revenue dressed up as recurring. Aggressive add-backs nobody documented. Inventory carried at hope instead of cost.

What good looks likeAn MRR bridge a buyer can follow (new, expansion, contraction, churn), normalised EBITDA with defensible add-backs, and a three-year trend that needs no forensic dig. In a product business the same discipline is contribution margin after returns and shipping, inventory at cost, and repeat cohorts doing the work MRR does elsewhere. Profit is not cash: the cash gap (days receivable plus days inventory minus days payable) gets priced too.

DOMAIN 2 · COMMERCIAL

Revenue quality & concentration

Would revenue survive losing the biggest customer, or the founder’s relationships?

Value upNo single customer above 10 to 15% of revenue. NRR above 100% and gross retention above 85%. Multi-year contracts. Demonstrated ability to raise prices without bleeding logos.

Value downOne customer at 20 to 30% or more. Everything month-to-month and cancel-anytime. A pipeline that lives in the founder’s head. The tell I always cross-check: a customer whose share of receivables exceeds its share of revenue is a collection risk wearing a revenue costume.

What good looks likeA contracted recurring base, documented pipeline, and a whale curve you have actually seen: which customers fund the profit and which quietly destroy it. In DTC the concentration lives in SKUs and wholesale accounts instead of logos, and it is tested the same way. Most owners never look.

DOMAIN 3 · DEMAND

Marketing & customer acquisition

Is growth efficient, diversified and durable, or bought, fragile, and dependent on one channel or one founder’s face?

Value upTwo or more meaningful channels. LTV to CAC above 3 to 1, payback under 12 months for SaaS, first orders that clear contribution after ad spend for eCom. A growing organic and brand moat. Spend that gets more efficient over time, with attribution to prove it.

Value down100% of leads from one ad platform. Rising CAC with payback stretching past 18 months. Growth that is clearly bought, not earned. The founder as the channel, which means the audience leaves with them.

What good looks likeA marketing engine that keeps running when the founder takes two weeks off, with unit economics written down, not remembered.

DOMAIN 4 · OPERATIONAL

Operations & IP

Does the business run as a system, or on heroics and tribal knowledge?

Value upDocumented, transferable processes. Fully owned IP with signed assignments from every contractor. Infrastructure that scales without linear headcount. A cap table a lawyer clears in a week.

Value downKnowledge that lives only in people’s heads. Code written by contractors who never signed an IP assignment. Manual, founder-touched delivery. Total dependence on one marketplace, one cloud, one API, one factory.

What good looks likeSOPs for the core workflows, supplier and platform risk consciously spread, so the buyer inherits a machine, not a rescue project.

DOMAIN 5 · THE SME VALUE KILLER

Owner-dependence & team

Can the business run and grow without you? This is the single biggest destroyer of private-company value, so it carries the heaviest weight.

Value upA capable second layer that owns functions. Customer relationships held by the team and the system, not the founder’s phone. Retention plans for the people a buyer needs to stay.

Value downFounder equals sales plus product plus support plus the face of the brand. Every key relationship personal. No number two. A buyer reads that as buying a job, and prices it with earn-outs and lock-ins.

What good looks likeThe 90-day test: the business runs 90 days without you and the buyer can see that it did. Every notch in that direction is worth real money at exit.

The M&A backbone

Deal-killers first. Value drivers second. Return decides the order.

Saleability improves in a fixed sequence: first remove what makes a buyer walk (unprovable financials, extreme concentration, legal and IP gaps), then amplify what lifts the multiple (recurring revenue, clean growth, a real management layer). Within each list, fixes are ranked by return on value drivers: payoff against cost, difficulty, time and risk. Highest return first, gut feeling nowhere.

Every red flag left on the table reappears as a worse structure: more of the price at risk, paid later, if at all. Cleaning the scorecard moves proceeds from contingent and later to cash and now.

Weak scores rarely just cut the headline price. They shift it into earn-outs, seller notes, escrow and holdbacks. And the same business is worth different amounts to different buyers, so the equity story gets dressed for the one most likely to pay up:

Individual · search fund

Buys a livelihood

Financing-constrained, acutely sensitive to owner-dependence and clean books. Pays the lowest multiple.

Strategic · competitor

Buys synergy

Pays for market share, technology or team. Can pay the most when the fit is real.

Financial · PE

Buys cash flow

Pays for stable, predictable earnings and platform potential. Fixated on quality of earnings and management depth.

Questions owners ask

What owners ask first.

What is an exit-readiness score?

A 1-to-5 read of how sellable the business is: the five company domains averaged, with Quality of Earnings and Owner-Dependence weighted highest because they kill the most SME deals. Every line item gets a Buyer-Confidence rating that records one thing: what a buyer does when they find the fact.

What makes an online business hard to sell?

Concentration and dependence, in their recurring shapes: cash-basis books with the owner’s life tangled into the P&L, one customer at 20 to 30% of revenue, all leads from one platform, code written by contractors who never signed an IP assignment, and a founder who is sales, product and support at once. A buyer reads that last one as buying a job.

How do buyers price owner-dependence?

It carries the heaviest weight of the five domains because it is the single biggest destroyer of private-company value. The test is 90 days: the business runs 90 days without you and the buyer can see that it did. Every notch away from that gets priced as earn-outs and lock-ins.

Do weak scores just lower the price?

Rarely just the price. Weak scores shift it into earn-outs, seller notes, escrow and holdbacks: more of the proceeds at risk, paid later, if at all. Cleaning the scorecard moves proceeds from contingent and later to cash and now.

Does market timing change what the business is worth?

A sellable business heading into a headwind still sells. Context sets the price ceiling and the timing, while the score itself stays yours to change. That is why the market is scored separately: Domain 0, published monthly as the outlook.

Read it. Then watch it run.

The teardowns run this exact examination on public companies, in the open. The assessment runs a five-minute version on yours.

See it run on a real company

Run it on yours · 3 min