Ready TO Sell Isn’t Ready FOR Sale
Big Jim Pulls Up Anchor
Jim Davis had spent 30 years building Big Jim’s Florida Fish Supply into a regional marine retailer with branches across the state. With Jim’s whopper of a personality and a scale-tipping marketing budget, Big Jim’s Fish Supply was now no small fish: annual sales topped $53 million. Revenues were stable, customers were loyal, and the management team had been with him for years.
At 68, Jim was ready to sell. It was time to step away and go fishing himself. Neither of Jim’s two daughters was involved in the business, and his management team wasn’t in a position to structure a buyout that would meet Jim’s price expectations. So, a third-party sale was obvious and a handful of bankers were lined up for a bakeoff because Jim believed the business was ready for sale.
But was it?
Why Ready Isn’t Ready
Many lower middle market (LMM) owners believe they’re ready to sell because the business is performing well - top-line sales are strong, they have a solid team and they’re making a good living.
But they don’t realize that their definition of ready for sale can be very different from the buyer’s - and whose definition proves more accurate will determine who captures the value.
LMM sellers often make the mistake of going to market too early, primarily for three reasons:
1. They Don’t Understand the Process
Most LMM sellers don’t fully understand the depth of inquiry and the speed required to move a transaction forward, especially when facing PE firms or strategic buyers.
Due diligence requests can run into the hundreds across financial, operational and organizational areas.
They're typically outgunned as institutional buyers bring numerous technically proficient deal team members and advisors to the table to dissect the business from multiple angles at once, and often bluntly.
Without preparation for this level of scrutiny, sellers can quickly become overwhelmed, impairing momentum and sometimes derailing the process entirely.
2. They Don’t Understand the Gaps in Their Business
Many founder-led companies are stronger commercially than operationally. The business appears to be functioning well - but not always in a way buyers can easily evaluate, rely on, or transfer after the owner exits. Perceived gaps devalue businesses, and those gaps usually fall into three areas:
Inadequate Finance and Accounting Infrastructure - Financial planning, reporting, metrics, and analysis are insufficient; processes, systems, and controls are weak; and staffing is under-resourced/under-skilled.
Limited Process Transferability - Key operating processes are undocumented or inconsistently applied; systems across finance, operations, and sales are loosely integrated; and HR, compliance, and risk-management practices are informal or reactive rather than institutionalized.
Fragile Execution Sustainability - Key revenue drivers are often not fully institutionalized - management teams may not be contractually secured or properly incentivized, customer relationships depend on individuals rather than systems, and planning, performance management, and accountability routines are informal.
Most owners don’t see these issues because the business appears to be functioning well. Buyers see them pretty quickly.
3. They Don’t Understand What Those Gaps Are Worth
When buyers identify inadequate infrastructure, limited process transferability, and fragile execution sustainability, they assume they will need to invest in the repairs.
Most painfully, the seller's lack of preparedness shows up as lower valuations, tighter deal structures, uncomfortable earnouts, unforeseen working-capital adjustments, or additional diligence requirements.
Value that could have belonged to the seller shifts to the buyer.
Most of these issues can and should be fixed before going to market - and the ROI on fixing them is often substantial, because even modest operational improvements can translate into materially higher valuations and cleaner deal structures.
Getting Ready Before Going to Market
Owners often assume that preparing for a sale begins when they hire an investment banker. In practice, the most important preparation usually happens earlier.
With more than 30 years of experience managing complex change for founder-led and PE-backed lower middle market businesses, as well as for Fortune 100 firms such as Goldman Sachs and Prudential Financial, I help owners identify and resolve the operational, financial, and structural gaps that sophisticated buyers evaluate in a transaction process.
If you, a client, or a portfolio company are considering going to market and would like to assess whether the business is not just ready to sell but is truly ready for sale – unlike Big Jim – please let me know. I would be happy to schedule an introductory call.
All the best,
Bob Fitts
CEO
v3.0
Miami, Florida
bob@v3llc.co
212-300-5568
About v3.0
Founded in New York in 2008 and headquartered in Miami since 2011, v3.0 helps founder-led and lower middle market B2B companies across the U.S. and beyond navigate complex challenges. We specialize in situations that demand broad, hands-on leadership across multiple functions for companies at major inflection points in growth, exit, integration, or turnaround. We serve as Interim or Fractional CEO/COO/CFO or as a highly embedded advisor. Our work spans strategy and operations, finance and marketing, analytics and execution.