By Andreas Pettersson, Founder, Leaders ADAPT
A buyer's diligence request list is long, specific and indifferent to how hard you worked. It arrives after the letter of intent, with a deadline, and every line asks for proof. Most owners see that list for the first time when it is too late to change the answers. This page gives you the list early.
I have been on the selling side. I built Arcules from zero to over 150 people and sold it to Canon, then ran a Canon company as its youngest standalone CEO. What I learned is that a buyer does not discount a company for what is wrong with it. They discount it for what they cannot verify. An exit readiness checklist is a way to find the unverifiable parts while you still own the calendar.
This exit readiness checklist has 40 items in six groups. Each item names the evidence a buyer wants to see, because in diligence a claim without a document counts as a risk, and risk comes off the price.
Quick answer: An exit readiness checklist tests a company the way a buyer will, before the buyer does. This one has 40 items across leadership, operations, finance, technology, customers, and legal and people, and names the evidence for each. Score every item green, amber or red. The score tells you whether you are months from market or a year or more, and which group to fix first.
Leaders ADAPT sells readiness, not the sale. Our exit readiness read is a fixed fee quoted after a first call, and its job is to tell an owner whether the company is ready for the exit they are now excited about. We do not broker transactions. Every figure on this page comes from a third party source, linked with the date I read it, and no firm named here pays us.
How to score the exit readiness checklist
Three colours, one rule.
Green means the item is true and the evidence exists in a place a stranger could find it without calling you. Amber means the item is true but the proof lives in your head, your inbox or a spreadsheet only you understand. Red means the item is not true yet.
The rule: score the evidence, not the intention. If your second in command runs the Monday meeting but there are no notes, that item is amber. If you plan to document the core processes next quarter, that item is red today.
Score alone first. Then ask your number two to score it without seeing your answers. The gap between the two scores is the most useful thing on this page.
Why bother this early. The IBBA Market Pulse for Q2 2026 found that across five sectors, between 60 and 90 percent of sellers had completed less than one year of exit planning, or none at all (IBBA and SellYourWay.org, released August 2026). The same survey reports that lower middle market deals took about a year to close. Add a year of preparation to that and you see why owners who start the checklist at 24 months out have options the others do not.
The checklist, part one: leadership, operations and the books
Leadership and the owner's role
| # | Item | The evidence a buyer wants |
|---|---|---|
| 1 | A named second in command | Two quarters of the weekly operating meeting chaired by that person, with notes and a scorecard showing results |
| 2 | Decision rights written down | An accountability chart with one name per seat, and a list of decisions the owner no longer makes |
| 3 | The team decides without you | Notes from at least three leadership meetings the owner missed, with decisions and owners recorded |
| 4 | The owner's week, audited | Four weeks of the owner's calendar sorted into work only the owner can do and work someone else could take |
| 5 | Top customer relationships moved | For the top 20 customers, the person who owns the relationship today and their last contact date |
| 6 | Key people named and kept | The five people whose exit would hurt most, with tenure, pay and a retention plan for each |
| 7 | An outside read on the top team | A written assessment of each leader by someone independent of the owner |
| 8 | The owner's role after close | A transition proposal, length and scope, that the owner can actually deliver |
Buyers read this group as one question. Does the company survive the owner leaving. Items 1, 3 and 5 carry most of the weight, and all three take time to become evidence. Our page on key person risk covers the fix sequence, and what buyers look for in a management team covers how they test the people.
Operations
| # | Item | The evidence a buyer wants |
|---|---|---|
| 9 | Core processes documented | An operations manual written by the people who do the work, revised in the last six months |
| 10 | A weekly scorecard with history | A weekly scorecard with 52 weeks of 10 to 15 numbers, each with an owner, red weeks explained |
| 11 | Capacity known | Throughput or utilization by month for two years, and where the next constraint sits |
| 12 | Supplier dependence mapped | Top ten suppliers by spend, terms, single source items and a named alternative for each |
| 13 | Quality measured | On time delivery, rework or warranty rates by month, with the trend |
| 14 | Plan versus result | Last year's annual plan beside last year's results, misses included |
| 15 | Risk and insurance current | Current policies, five years of claims, and a short register of known risks and what was done |
Operations evidence answers whether the earnings come from a system or from heroics. A scorecard with a year of honest red weeks earns more trust than a perfect dashboard built last month.
Finance and the books
| # | Item | The evidence a buyer wants |
|---|---|---|
| 16 | A monthly close on a calendar | Twelve consecutive closes, each finished inside 15 business days, with dates |
| 17 | Three years of statements | Reviewed or audited financials and the accountant's report for each year |
| 18 | Owner costs separated | An add back schedule with the invoice or contract behind every line |
| 19 | A sell side quality of earnings | The report, and your written answer to each finding |
| 20 | Margin by line | Gross margin by customer, product or location, reconciled to the income statement |
| 21 | A cash forecast with a track record | A 13 week cash flow with at least a quarter of forecast against actual |
| 22 | Working capital understood | Monthly net working capital for 24 months, with the seasonal pattern explained |
Item 19 is the one owners skip and regret. A sell side quality of earnings tells you what the buyer's accountants will say before they say it. Items 18 and 22 are where the argument about the final number usually happens, so the documentation is worth more than it looks.
The checklist, part two: technology, customers, and legal and people
Technology and data
| # | Item | The evidence a buyer wants |
|---|---|---|
| 23 | Systems inventory | Every system, licence, annual cost, renewal date and an admin who is not the owner |
| 24 | Access held by the company | A company owned password manager and a current list of who can reach what |
| 25 | Security basics in place | A self assessment against a recognised framework, multi factor login, a tested backup, incident history |
| 26 | Data you can trust | A map of where customer and financial data lives, who can change it, and how clean it is |
| 27 | Software and IP owned | Signed assignment agreements from every developer and contractor who built anything |
| 28 | AI use on the record | Which AI tools are in use, on what data, under what policy, and an AI readiness assessment |
For item 25 you do not need an expensive audit to start. NIST publishes a free Cybersecurity Framework 2.0 Small Business Quick Start Guide (SP 1300, February 2024), written for companies with modest or no security plans. Working through it and keeping the notes is evidence. Technology diligence rarely kills a deal in a company this size. It moves money into escrow and adds months.
Customers and revenue
| # | Item | The evidence a buyer wants |
|---|---|---|
| 29 | Concentration known | Revenue by customer for three years and the share held by the top ten |
| 30 | Contracts that transfer | Every material customer contract, renewal date and any consent or change of control clause |
| 31 | Recurring revenue separated | Recurring and one time revenue split by year, with retention by customer cohort |
| 32 | A pipeline someone else owns | Twelve months of pipeline history with win rates, run by someone other than the owner |
| 33 | Pricing rules written | A price list, discount rules, and who may approve an exception |
| 34 | Customers who will talk | Retention figures, a complaints log, and three references willing to take a buyer's call |
Item 32 and item 33 are leadership items wearing a sales costume. If every price exception comes to you, the buyer is pricing your departure into the revenue line.
Legal and people
| # | Item | The evidence a buyer wants |
|---|---|---|
| 35 | Corporate records clean | Formation documents, an ownership ledger, minutes, and any buy sell agreement |
| 36 | Employment paper in order | Offer letters, confidentiality and invention assignment agreements, a handbook, contractor classification reviewed |
| 37 | Claims disclosed | Pending or threatened claims and five years of settlements |
| 38 | Licences and permits current | Every licence and permit, with renewal dates and inspection history |
| 39 | Tax filings and structure | Three years of filed returns, a view on sales tax exposure, and your advisor's view on asset versus stock sale |
| 40 | People costs on one page | An employee census with pay, benefits, bonus plans, and any promise made verbally |
Item 39 deserves an early conversation with your tax advisor. In an asset sale the buyer and seller each report how the price was allocated across the assets on IRS Form 8594, and under 26 U.S. Code 1060 a written agreement between the parties on that allocation is binding on both. The allocation is negotiated, and it changes how much of the headline number you keep. The Exit Planning Institute found that just 9 percent of baby boomer owners have an estate plan (EPI, August 2025), which tells me the personal side of item 39 is usually red too.
Reading your score
Count your colours by group, not in total. Forty items averaged together hide the one group that moves the price.
My rule of thumb, from my own sale and the owners I work with, not from a study:
Mostly green, a few amber. You are probably months from market, not years. The next steps are a valuation view, our how much is my business worth page covers the methods, and converting the ambers into documents.
Amber across the board. The company works, but the proof does not exist. Six to twelve months of documentation, a quality of earnings, and a year of closes.
Red in the leadership group. Twelve to twenty four months, whatever the other groups say. A second in command and a team that decides without you take quarters to become evidence. This is the owner who tried a general manager once, watched it fail, and would rather sell than try again. The failed hire did not go away. It is in the price.
Why the colour of the leadership group matters so much. Buyers model risk into the return they need. Pepperdine's 2026 Private Capital Markets Report puts the median expected annual return at about 20 percent for private investment firms buying companies with $1 million to $5 million of EBITDA (BVWire, July 2026). Every item they cannot verify makes that return harder to reach, and the simplest way for a buyer to restore it is to pay less.
The good news is in the same IBBA survey: 87 percent of deals over $5 million drew at least three offers in Q2 2026. Competition exists for companies that are ready. The checklist is how you find out whether yours is one of them. Our prepare business for sale page turns the red and amber items into a quarter by quarter plan.
Where AI fits in working the checklist
Three places it helps, and one place it does not.
It helps you gather evidence. Most of the amber items are amber because the proof is scattered across inboxes, shared drives and old spreadsheets. An AI assistant pointed at your own files can pull customer revenue by year, find every contract with a change of control clause, and list the systems your invoices say you pay for.
It helps you build the data room before anyone asks for one. A company knowledge system, the kind we build for leadership teams, answers diligence questions in hours instead of days and keeps the answers consistent. For companies running on EOS, our guide to AI for EOS companies shows where the scorecard and the rocks feed that system.
Where it does not belong is the scoring of the leadership items and the decision about what to do with the score. An AI can count your colours. It cannot tell you whether your number two is ready or whether you are. Our page on what not to delegate to AI is the longer version.
What a checklist does not fix
A checklist does not build a second in command. It tells you that you do not have one. The building is leadership work, and it is the work our leadership team development is designed for.
A checklist does not cure excitement. Harvard Business Review's When to Walk Away from a Deal (2004) warns buyers against deal fever distorting diligence, and asks them to name their walk away price before they start. Sellers need the same discipline. Write down your walk away number and your reason for selling before the first conversation with a buyer, and keep running the company as if no sale is coming.
And a checklist scored only by the owner does not tell the truth. Owners rate their team generously and their own dependence low. Get a second scorer.
Who is on the bench for this
Steve Shaw is the fractional CFO on the Leaders ADAPT bench. Steve has twenty years in finance leadership and works with owners on clean books, cash discipline, financial positioning before a sale, and the numbers conversation with buyers and lenders. Items 16 to 22 are his ground.
Thor Legvold is the leadership psychologist on the bench. He works on assessments, executive fit, team dynamics and the people decisions behind a sale. Item 7, the outside read on your top team, is his, and so is the harder question underneath items 1 and 3: whether the person you are counting on can carry the company.
Sergey Dmitriev is the fractional CTO and AI systems partner on the bench. He builds and runs the AI and data work we deliver, including company knowledge systems, and trains leadership teams on AI tools with me. Items 23 to 28 and the data room are where he starts.
Marina St. Cyr is a fractional COO on the bench. She brings operations leadership for owner led companies, is strong on detail, and runs the cadence and the follow through. When items 9 to 15 are red, she is the one who makes the weekly rhythm real.
Every engagement runs through Leaders ADAPT. I take the first call, match the partner, and stay in the room.
Exit readiness checklist FAQ
What is an exit readiness checklist?
An exit readiness checklist is a list of the things a buyer will test in diligence, written so an owner can test them first. A useful one goes beyond the financials and covers leadership, operations, technology, customers, legal and people. For each item it names the document or record that proves it, because buyers pay for evidence, not for the owner's assurance that something is true.
How long before a sale should I start the checklist?
Start 12 to 24 months before you want to go to market. Several items need history to count, such as a second in command with two quarters of results, a year of clean monthly closes, or a weekly scorecard with a full year behind it. You cannot produce history in a hurry. The earlier you score yourself, the more of the red items you can still turn green.
Which part of the checklist matters most to buyers?
In owner led companies between $5M and $50M, the leadership group usually moves the price most, because it tells the buyer whether the company survives the owner leaving. Customer concentration and clean books come close behind. A company can have perfect financials and still be discounted if the owner is the sales team, the pricing authority and the only person the top customers call.
What evidence do buyers ask for in due diligence?
Buyers ask for documents with dates on them. Three years of financial statements, monthly closes, an add back schedule with invoices, customer revenue by year, material contracts, employee census and agreements, a systems inventory, security and backup records, and minutes or notes showing the team making decisions. If the only proof of an item is the owner's word, treat it as unproven.
Can I complete an exit readiness checklist myself?
You can score most of it yourself in an afternoon, and you should. The difficult part is honesty on the leadership items, because owners rate their own team generously and their own dependence low. An outside read catches what you cannot see from inside, and it is the reason our exit readiness work pairs the owner's self score with an independent view.
What does a red score in the leadership group mean?
It means the company still depends on you in ways a buyer will price. Expect a lower multiple, a longer transition period, or deferred payment tied to results after close. It also means the work is mostly leadership work, building a second in command and a team that decides without you, and that work usually takes 12 months or more to show up as evidence.
Is an exit readiness checklist the same as a due diligence checklist?
No. A due diligence checklist is the buyer's request list, issued after a letter of intent, when there is little time to fix anything. An exit readiness checklist is the seller's version, used a year or two earlier. The items overlap, but the purpose differs. One documents the company as it is. The other gives you time to change it first.
Find out whether you are ready for the exit you are now excited about
Print the 40 items. Score them tonight, honestly, in pencil. Tomorrow morning, give a clean copy to your number two and ask for their score by Friday. Then put the two side by side and circle every item where you disagree. That circle is your real starting point, and it is usually in the leadership group.
What the first conversation looks like
It is a 30 minute call with me, not a sales rep. Bring your scored checklist, even half finished, and tell me the exit you are picturing and when. I will tell you which group worries me most, whether you look months or a year or more from market, and whether an exit readiness read is the right next step or whether the honest answer is to talk to an advisor now.
If we go ahead, the read is a fixed fee quoted after that call. Steve, Thor and Sergey take their groups, I take the whole, and you get one document that scores the company against these 40 items with the evidence we found and the evidence we did not.
Your step for tomorrow morning: take the free assessments so I can see how much of the company runs through you, then read the exit readiness page and book the call. Find out whether you are ready for the exit you are now excited about.
