A well-known quote that some attribute to Abraham Lincoln quote states, “Give me six hours to chop down a tree, and I will spend the first four sharpening the ax.” John Roppo sees a similar need for preparation in a sale process.

Over Roppo’s career as a CFO, where he was involved in three different sales, one came out of nowhere. A buyer called, and the private equity owner decided the offer was too good to pass up. Fortunately, his company was ready.

“If we had not been ready at all points in time — with what I believe being ready or being prepared entails — we would have not been able to entertain that offer in the way that we were able to and get the deal done,” he says. “It would have taken a lot longer, and it might have fallen apart.”

The economy, the marketplace, the financing that’s available for buyers — these are all outside of your control, says Roppo, who has started his own firm, Roppotunity LLC, to help companies prep for sale, among other things.

“You can’t control any of those, but you can control that your company is prepared and running well and able to make the numbers that it says it will make,” he says.

Get your finances in order

Many companies don’t have a rigorous financial system that’s reviewed by an accounting firm. Even if you hire an outside firm to help conduct an audit, the good financials, metrics and key performance indicators that buyers are looking for start on the inside.

“One of the first questions the buyer’s going to ask is, ‘Show me your financials. Show me your KPIs. Show me how you run your business and how it’s performing, based on how you want to measure it at the present time,’” Roppo says. “You don’t want to be scrambling when you get that call or when you decide to sell, trying to put together data that you’ve never put together before. That’s just not very confidence inspiring.”

Several years ago, Roppo’s company went to market. He had been CFO for less than a year, and the business didn’t track things — such as recurring revenue versus nonrecurring revenue or breaking finances down by geographic area — the way larger strategic buyers or PE firms did.

The business didn’t sell, but the executives learned from the experience. If you have to analytically derive numbers from past data, trying to categorize things, it’s never as accurate, he says.

“We took that lesson of making sure that our data aligned to how it would need to be viewed by buyers, whether strategic or private equity,” Roppo says. “We collected at every sale, every invoice that was sent out, had all those different revenue types and data points tracked, so that the buyers could then ask those questions, get immediate answers and feel confident that we knew what we were doing.”

Plus, he says, when metrics are tracked well, your board and managers can utilize those same figures to run the business better.

Another thing to consider is your quality of earnings. Roppo says buyers typically do a quality of earnings report, but a seller may want to do an investigation first, in order to maximize value.

“It behooves you to keep track of special events that may have impacted your results, positive or negative, but especially the negative ones, because you’re going to have to answer questions about why it happened,” he says. “Is going to happen again? How do I believe your current figures if this repeats itself?”

Give the right impression

It’s also a good idea to rehearse your management presentations. Even if you hire an investment banker or outside advisers, your internal team will need to gather documents, think through the company’s history and create a unified narrative.

If you’re presenting in front of 20 buyers over a few days, it helps to be able to hand things off cleanly and look like a cohesive team, not a bunch of individuals, Roppo says.

“You need to build that chemistry, to make it look, again, cohesive — that you know what you’re doing and the whole team knows how they’re running the business,” he says.

Prior to a sale, it’s critical to get all your documentation in order. It might sound like administrative work, but potential buyers will want to see your insurance policies and benefits plans, whether those are in a drawer or on a server, Roppo says.

“Digital recordkeeping is as sloppy as anything, where nobody can find files on a server,” he says. “If there are 2,000 files or more, keep that all together and keep it orderly so that, when you get into that process, you can find it. You can answer questions. You can, again, look professional and that could build confidence in the buyer.”

Preparedness, professionalism and cohesion also speak to your culture. It may be noted more by some buyers than others, but it will be noticed.

The value of culture isn’t easy to quantify, but Roppo remembers one buyer, in particular, mentioning how impressed they were with the culture. He’s not sure how much it weighed in the overall value, but it very likely weighed into their enthusiasm for the deal.