Preparation to sell

What are the phases of selling a company?

Selling an SMB in Mexico usually takes six to twelve months with a serious counterparty. Before LOI or data room, the phase you control most — and the one that moves price most — is preparation. The rest of the process exists so you know it; this guide goes deep on the stretch before the table.

1. Preparation — Rebuild EBITDA, normalize owner compensation, measure customer concentration and owner dependency, organize documentation, and set a defensible range before anyone reviews your numbers. This guide covers that phase in detail.
2. Market — Identify potential buyers (strategic, funds, competitors) and open initial conversations under confidentiality. Requires market materials and, often, an advisor or broker; not a prospecting manual, but you should know it exists and comes after preparation.
3. Execution — Letter of intent (LOI), due diligence, price adjustment negotiation, and legal drafting of the definitive agreement. Here the counterparty validates everything you promised in preparation.
4. Close and transition — Signing, payment, earn-out if applicable, and transition period with the team. The buyer checks whether the business runs without you.

What does ready to sell mean?

Ready is not a number in your head. It is knowing how sellable you are today — sellability score, gaps that lower the multiple, and documentation that holds up in due diligence — before setting expectations with a fund, counterparty, or advisor. Your accountant closes the year with SAT; a counterparty rebuilds EBITDA, penalizes concentration, and measures whether the business survives without the owner. Different views of the same business.

• Rentabilidad — Margen EBITDA sostenible y consistencia de resultados. Base del múltiplo que pagará una contraparte.
• Crecimiento — Tendencia de ingresos y EBITDA; un negocio estancado recibe penalización en valuación.
• Eficiencia operativa — Productividad por empleado y estructura de costos. Señales de escalabilidad sin dependencia excesiva del dueño.
• Diversificación de clientes — Concentración en pocos clientes reduce el múltiplo; un cliente >40% de ingresos es brecha típica.
• Calidad de documentación — De registros informales a documentación lista para due diligence. Cada escalón sube tu score.
• Institutional target: score ≥ 75/100 before opening a formal process with a counterparty.
• Below 60 — or below 65 with high-impact gaps — close gaps before going to market or negotiate with eyes open on the discount.
• Succession or professionalization — If you are not selling to a third party, the same score measures whether the business can run without you; situation guide in related links.

Each dimension has its own guide: financial documentation before the table, customer concentration and owner dependency go deeper on the most frequent ones in Mexican SMBs.

How do counterparties value your company?

In Mexican SMBs with stable EBITDA, the dominant method remains multiple × normalized EBITDA (Rosenbaum & Pearl; market references at Capital En Orden and IBBA Market Pulse). Value on tax statements or a round number rarely matches what a buyer pays: they rebuild earnings, adjust your compensation, and discount operating risks.

• Normalized EBITDA — Operating profit after adjusting owner compensation below market, non-recurring items, and personal expenses mixed with the company.
• Sector multiple — Depends on recurrence, concentration, owner dependency, and documentation quality; not a fixed bar number.
• Below 3×: Material due diligence risk, distress, or business not operating independently of the owner
• 3×–4×: Moderate-to-high concentration, owner dependence, or small EBITDA (< MXN 3–4M)
• 4×–5×: Stable SMB, EBITDA MXN 2M–15M, most common range in MX transactions
• 5×–6×: Recurring or contracted revenue, lower owner dependence
• Above 6×: Uncommon for MX SMB MXN 2M–15M; requires contracted recurrence and a competitive process
• Paper value vs defensible range — The first is what you believe or what a tax statement says; the second is what you hold in negotiation after normalizing and quantifying gaps.

Methodology, sensitivity, and sources at score, gaps, and preparation.

What else gets reviewed in Mexico besides EBITDA?

In Mexican SMBs, a serious counterparty does not stop at the multiple. They review tax posture, labor liability, and whether the business runs without the owner. SAT compliance and clean labor do not replace due diligence — but aggressive or messy history shows up at the table and can force escrow, re-trading, or a dead deal.

• Tax posture (SAT) — Invoicing, gaps between accounting and filings, open contingencies or litigation that can kill the deal or force escrow and price discount. With aggressive or messy history, tax audit before opening market makes sense.
• Labor risk (IMSS, PTU, tenure) — IMSS registrations, PTU paid formally, contracts and obsolete outsourcing schemes. Silent labor liability surfaces in due diligence and compresses valuation even when EBITDA looks healthy.
• Informal governance and owner dependency — Personal expenses mixed with the company, key relationships in the owner's head, non-transferable operations. An institutional counterparty requires operations that survive without you.

Go deeper on tax risk (SAT) before capital movements. For IMSS, PTU, and tenure, see the labor risk guide in related links.

What to do at 30, 90, and 12 months?

Most owners open conversations without a map. These actions prioritize what a counterparty will review first — they do not replace a custom plan if your score is low.

• 30 days — Consolidate three years of statements with external accountant; separate personal expenses; list contracts with main clients; document owner compensation; get an initial score and gap read.
• 90 days — Attack high-impact gaps (concentration, informal documentation, owner dependency); formalize second-tier roles; archive IP and key labor contracts; check whether documentary prep improved.
• 12 months — If material gaps remain in diversification or owner transition, postpone market or negotiate long transition with known discount; if score exceeds 75 and critical gaps are closed, you can open counterparty conversations.

Week-by-week calendar in first 90 days before capital movements.

Who do you need on your team and when?

You do not need to hire everyone at once. Order matters: internal clarity first, then confidentiality and negotiation with third parties.

• Accountant / tax — Indispensable for consistent statements and SAT compliance; enters in preparation, not only at close.
• M&A advisor or broker — Finds and filters buyers, structures market process; enters when you already have defensible range and decision to exit, not before ordering your numbers.
• M&A lawyer — LOI, NDA, definitive agreement and liability protection; a general corporate lawyer often falls short on reps and warranties.
• Quantified preparation — Before LOI or data room it helps to know score, gaps, and defensible range to align CFO, accountant, or lawyer. Does not replace legal advice or sale intermediation.

What a preparation diagnostic measures and when to escalate: preparation Diagnostic.

What can go wrong if you exit without preparing?

An honest guide includes what hurts. Most re-trading and dead deals come from surprises the owner could have quantified earlier.

• Re-trading — Buyer lowers price in due diligence when finding concentration, owner dependency, or undisclosed EBITDA adjustments.
• Deal fatigue — Six to twelve month processes wear out owner and team; negotiating without preparation lengthens every round.
• Team — Premature leaks or total silence drive talent out; plan when and how to communicate.
• Cost of inaction — Negotiating 0.5× multiple below for avoidable gaps usually costs more than six months of preparation.

When the diagnostic is enough and when you escalate to formal due diligence: preparation Diagnostic vs due diligence.

What does this guide not cover?

This guide is exit preparation for Mexican SMBs — framework, checklist, and valuation reality. It does not include downloadable templates, buyer conversation scripts, or NDA or teaser models: that belongs to your lawyer or a Transaction process when there is already a counterparty. It is not certified expert opinion for courts or sale intermediation. If you already have LOI, due diligence timeline, or active negotiation, the next level is documented assessment and Transaction support.

How do you measure sellability in numbers?

When you want this applied to your company — 0–100 score, up to five prioritized gaps, normalized P&L, and defensible range — the Vestcrest Diagnostic applies the same framework in a ~30-minute questionnaire, PDF to share with CFO or lawyer, and 30-minute session to interpret results. No sales calls to buy.

Deliverable detail in why does it cost $497 USD? and visual example in the demo report.