12-Month Exit Plan: Month-by-Month Checklist

Engage a CPA with M&A transaction experience

Ask specifically: how many business sales have you supported in the last 2 years? You want at least 5–10.

Pull 3 years of tax returns and monthly P&Ls

Organize by year. Identify any anomalies (COVID dip, unusual one-time items) that will need explanation.

Create an add-back schedule

List every personal or non-recurring expense in the business: owner salary, vehicle, health insurance, family payroll, meals, home office, one-time repairs.

Calculate your actual SDE

SDE = net profit + owner total comp + non-recurring add-backs. This is the number your valuation is based on.

Clean up personal expenses from the books

Going forward, minimize mixing personal and business expenses. Buyers and lenders scrutinize the last 12 months most.

Review your balance sheet for noise

Write off bad debt. Remove personal assets. Reconcile accounts receivable aging. Fix anything that will raise questions in diligence.

Map your top 10 recurring customers and their contract status

Convert as many as possible to annual service agreements. Document renewal dates, contract values, and auto-renewal terms.

Identify the decisions only you can make

Every one of these is a risk factor. Start delegating or documenting the process for each.

Document your top SOPs

Focus on the 10 most common tasks and the 5 most common problems. Even a basic Google Doc counts.

Review customer concentration

If any customer is >20% of revenue, actively diversify. This is one of the most common deal complications.

Assess equipment and fleet condition

Buyers will inspect everything. Deferred maintenance discovered in diligence becomes a price chip. Address it now.

Check for any pending legal or compliance issues

Liens, pending lawsuits, license renewals, EPA requirements — all will surface in diligence. Know your exposure.

Research brokers who specialize in your industry

A specialist who has sold 10+ businesses in your category knows your buyer pool and market multiples better than any generalist.

Request and check references from past sellers

Ask: would you use them again? What would you do differently? How many offers did you receive?

Get a Broker Opinion of Value (BOV) from 2–3 brokers

A BOV tells you what your business is worth in the current market. If there's wide variation, ask why.

Review listing agreement terms carefully

Watch for: exclusivity duration (ask for 9 months, not 12), success fee percentage, tail clause (if you find your own buyer), and marketing commitments.

Sign with your chosen broker

Don't be rushed. The right broker is worth waiting for. A bad broker under an exclusive agreement can cost you months.

Review and approve your Confidential Information Memorandum (CIM)

This is the document qualified buyers receive. Review every number and claim. Errors here create diligence problems.

Establish your confidentiality requirements

Decide: who can know the business is for sale? Employees? Key suppliers? Nail down your NDA requirements with your broker.

Qualify every buyer inquiry rigorously

Most inquiries are not real buyers. Insist on NDA, proof of funds, and a completed buyer profile before sharing anything confidential.

Prepare for management meetings with serious buyers

Practice your ownership narrative: why are you selling, what are the growth opportunities, what does a successful transition look like?

Don't let the sale process distract from operations

This is the most common mistake. Declining revenue during the sale process gives buyers leverage to renegotiate. Keep driving performance.

Evaluate all offers on total economics, not just price

Down payment, seller note amount and terms, earnout provisions, escrow, working capital peg — all affect what you actually receive.

Negotiate the LOI — especially the exclusivity period

LOI exclusivity locks you to one buyer. 60–90 days is standard. Push back if they want 120+. Keep the period tight — leverage disappears once you're exclusive.

Run the purchase price allocation by your CPA before signing

Once the LOI is signed, allocation negotiation gets harder. Agree on the asset allocation now to avoid surprises at closing.

Hire an M&A attorney

Not a general business attorney — someone who closes business transactions regularly. They'll negotiate representations, warranties, and indemnification provisions that matter enormously.

Set up a virtual data room

Organize all documents in a shared folder (Google Drive, Dropbox, or a deal-specific VDR). Controlled access, versioned documents, clear organization.

Prepare the full document checklist in advance

Tax returns, P&Ls, customer contracts, leases, employment agreements, equipment list, insurance certificates, licenses, permits, accounts receivable aging.

Be responsive and transparent

Slow responses during diligence erode buyer confidence and create momentum for renegotiation. Answer questions same-day where possible.

Expect a Quality of Earnings (QoE) process

Buyers at $1M+ often hire an accounting firm to verify your add-backs and financials. Have your backup documentation ready.

Maintain operations — do not coast

Any revenue decline during diligence gives the buyer grounds to renegotiate. Run the business as if it's not for sale.

Review the Purchase Agreement in detail with your attorney

Reps and warranties, indemnification caps and deductibles, working capital targets, and escrow holdback terms all affect your final economics.

Negotiate the transition period

You'll stay on post-close to help with transition. Negotiate the length, your compensation during that period, and what your obligations are.

Notify employees, customers, and vendors post-close

Work with the buyer on a communication plan. Timing and messaging of announcements significantly affects customer and employee retention.

File the correct tax forms

Your CPA will handle Form 4797 (asset sales), Schedule D, and any state-specific filings. Don't wait — this is a high-complexity tax year.

Celebrate — then plan what's next

Most business owners underestimate the emotional transition. Think about what you're moving toward, not just what you're leaving.