Making your business sale-ready: a finance-led plan

Why think like the buyer’s lender?

Owners preparing to sell usually think about the buyer: what they’ll pay, what they’ll value, how to present the business. But for most established SMEs, the buyer isn’t paying from cash. They’re borrowing a meaningful part of the price, and their lender will run a credit assessment on your business before the deal completes.

That lender asks the same questions any credit team asks. Are the earnings real and repeatable? Can the business service the acquisition debt? What security is there beyond goodwill? What happens if the key customer or the owner leaves? If the answers are unclear, the buyer comes back with a lower price, a larger earn-out, a request for vendor finance — or no deal.

Preparing a business for sale, then, is largely about making it financeable. The same work also makes it easier to run, easier to refinance and more resilient, so it pays off whether or not you sell.

The three-year plan

Timing	Focus	Why it matters to a buyer’s lender
Year 3 before sale	Normalise earnings, fix structure, get tax advice	Two to three clean years of history will be examined
Year 2	Reduce owner dependency and concentration, tighten working capital	Lower key-person and customer risk
Year 1	Vendor due diligence, documents, deal terms	Faster, cleaner credit approval for the buyer

Year 3: clean earnings and structure

Normalise the income statement. Pay the owner a commercial salary for the role. Remove personal expenses. Put family members on market wages or remove them. Document genuine one-offs so they can be added back credibly.

Tidy the balance sheet. Resolve director and related-party loans. Separate non-core assets — an investment property, a boat, a holiday house — from the trading entity if they’re not part of the sale. Clear old PPSR registrations and unused facilities.

Resolve tax issues. Lodgements current, ATO debt cleared or on a firm plan, super paid on time — noting that from 1 July 2026 Payday Super requires contributions to reach funds within 7 business days of payday.

Get tax and structuring advice. Small business CGT concessions can materially change the after-tax outcome of a sale. The ATO’s basic conditions include being a CGT small business entity with aggregated turnover under $2 million or meeting the maximum net asset value test, which is $6 million and not indexed, plus further conditions. Many established SMEs sit near or above those thresholds, so the structure of the sale and the timing of asset movements need planning well ahead.

Year 2: reduce the risks buyers price in

Owner dependency. If customers, suppliers, the bank and staff all deal with the owner personally, the buyer’s lender sees key-person risk. Build a second tier of management and hand over relationships visibly.

Customer concentration. A buyer’s lender will stress-test the loss of the largest customer. Reducing concentration — or securing that customer under a longer contract — improves both price and terms. See our guide to customer concentration.

Working capital efficiency. A business that collects promptly and holds lean stock is easier to fund, and the working capital adjustment at completion is less contentious. Measure it with the working capital cycle calculator.

Leases and contracts. Check assignment and change-of-control clauses. A premises lease that can’t be assigned, or a key contract that terminates on sale, will stop a buyer’s lender.

Year 1: package the business

Vendor due diligence. Assemble what a buyer and their lender will ask for: three years of accounts, management accounts, aged debtors and creditors, stock listing, customer and supplier contracts, leases, employee entitlements, ATO statements and PPSR searches.

Information memorandum. A clear description of the business, its earnings (with adjustments explained), its people and its opportunities.

Deal terms that finance. Decide what you’re willing to offer to make the deal work: vendor finance, deferred payments, an earn-out, a transition period.

If you’d like to understand how a buyer’s lender would view your business today, ask a specialist for a financeability read — no credit check is involved.

Financeable deal structures

The way you structure the sale affects how easily a buyer can fund it.

• Vendor finance. You carry part of the price, usually ranking behind the buyer’s lender. It signals confidence and fills the gap between the buyer’s equity, the lender’s appetite and your price.
• Earn-out. Part of the price depends on future performance. Useful where you and the buyer disagree on value, but it puts part of your price at risk after you’ve lost control.
• Transition period. Staying on for six to twelve months to hand over relationships reduces the buyer’s lender’s key-person concern.
• Property. If the business occupies property you own, a long lease to the buyer — or selling the property separately — gives the buyer’s lender clarity.

Buyers commonly use property security to fund the lending portion of an acquisition; see business acquisition finance for the buyer’s side of the deal.

Selling to managers or family

Many owners prefer to sell to people they know. The preparation principles are the same, with extra focus on how the successors will fund the price — usually a combination of their own property equity, vendor terms and lender funding. See management buy-out finance and succession funding.

Illustrative preparation

Illustrative only; no real business or person. The owner of a $12 million turnover specialist fabrication business planned to sell in three years. In year one she put herself on a commercial salary, moved an investment property out of the company, and took advice on CGT concessions and structure. In year two she promoted an operations manager, introduced him to the top ten customers, and won a three-year supply agreement with her largest client. In year three she commissioned vendor due diligence.

When she went to market, two buyers’ lenders were able to credit-approve quickly because the earnings were clean and the key-customer risk was contracted. The final deal included a modest deferred payment rather than the large earn-out she’d originally expected.

A sale-readiness checklist

• Commercial owner salary; no personal expenses in the accounts
• Two to three years of clean financial statements
• Related-party loans and non-core assets resolved
• ATO lodgements and payments current
• Management layer below the owner, with visible relationships
• Top customer share reducing, or secured by contract
• Working capital measured and efficient
• Leases and key contracts assignable
• Tax and structuring advice obtained
• Due diligence pack assembled

What a buyer’s lender will test in your numbers

A buyer’s lender assesses your business much as your own bank would, with one extra question: can the business carry acquisition debt on top of its existing obligations? Expect them to look at maintainable earnings after normalisation, the working capital the business needs to trade, capital spending required to keep the assets productive, and the resulting debt service cover after the buyer’s borrowing. The cleaner and more consistent your last three years look, the more debt a lender will support — and the less of your price will need to be deferred.

When the timeline is shorter than three years

Not every exit is planned. Illness, a partner dispute or an unsolicited offer can compress the timetable to months. In that case, prioritise what a buyer’s lender will test first: clean, explained earnings for the most recent year, a current ATO account, a list of all debts and security, and a clear account of customer and staff risks. Deal terms such as vendor finance or a transition period can cover what preparation can’t.

Planning an exit in the next few years?

Whether you’re selling to a trade buyer, your managers or your family, it helps to know how a lender would view the business today — and what would change their view. Tell us about the business, the likely buyer and the timing.

Enquiring doesn’t involve a credit check, and your plans stay confidential with one specialist rather than being passed around a group of lenders. Please describe turnover, earnings, existing debt and property accurately on the form, so we can give you a realistic read. Talk to a specialist.