Executive Summary
Most discounts happen before you meet a buyer—via messy numbers, owner-dependency, weak contracts, and avoidable working-capital surprises. Starting 12–36 months ahead gives you time to fix fundamentals, prove stability in the numbers, and enter the market with options. Result: higher valuation, cleaner diligence, and faster close. For landscape context, see our Canadian SME market under $20M
Why 12–36 months matters
- Valuation uplift: Time to grow normalised EBITDA, reduce customer concentration, and show a track record (not a promise).
- Certainty: Clean QoE-ready numbers and an established 2IC reduce perceived risk and re-trades.
- Speed: Prepared sellers move through diligence materially faster, avoiding “deal fatigue.”
- Negotiating power: When you can choose when to sell, you can choose who you sell to—and on better terms.
What early planning unlocks (the six levers)
- Financial cadence & QoE – Monthly P&L/BS/CF, clear SDE → normalised EBITDA bridges, tax filings current.
- Working capital peg – 12-month baseline; tighten AR days; right-size inventory to avoid price chips at closing.
- Customers & revenue quality – Multithread top accounts; renewals calendar; pipeline ≥3× bookings to prove durability.
- People & succession – Visible, credible 2IC with decision rights; SOPs and role clarity reduce owner-risk.
- Contracts & compliance – Assignability, price-increase and termination clauses reviewed; permits and insurance up-to-date.
- Data room & story – Buyer-grade evidence pack; simple dashboards; narrative that connects drivers to numbers.
12–36 month roadmap (what “good” looks like)
| Horizon | Focus | Examples of proof you’ll show buyers |
|---|---|---|
| Months 1–6 | Stabilise the numbers | 24–36 months of monthly P&L, Balance Sheet & Cash Flow; bank reconciliations; AR/AP agings; taxes up to date |
| Months 6–12 | De-risk operations & customers | 2IC named; SOP index; Top-20 customer file (revenue, margin, renewals, key contacts) |
| Months 12–24 | Improve cash & margins | Working capital peg baseline; AR days reduced; inventory turns increased; pricing uplifts tested and retained |
| Months 24–36 | Evidence repeatability | 8–12 quarters of consistent KPIs; churn reduced; steady pipeline & close rates; clean Quality of Earnings (QoE) pack |
For context on the market you’ll face, review our Canadian SME market under $20M overview, and for deal mechanics see deal structure and contingencies.
Sector quick wins (sub-$20M revenue)
- Manufacturing: First-pass yield, on-time delivery, changeover time, maintenance backlog, supplier SLAs.
- HVAC/Trades: Technician utilisation, recurring maintenance agreements, response-time SLA, cancellation/redo rate.
- Food/CPG: QA/recall readiness, shelf velocity, fill rate, distributor chargebacks, packaging compliance.
- Services: Retainer mix, term length, assignment clauses, account handover processes.
The ROI of starting early (illustrative)
- EBITDA +10–15% from pricing discipline, mix, and waste reduction over 12–18 months.
- Working capital release from AR days −8 and inventory turns +1.0 (reduces the closing true-up risk).
- Multiple protection by lowering top-3 customer concentration under 40% and demonstrating a functioning 2IC.
What buyers expect to see (and you can build in time)
- Normalised EBITDA bridges; WC peg memo; tax clearance.
- Customer concentration analysis + renewal calendar.
- RACI/Org chart with 2IC highlighted; SOP index.
- Contract summaries (assignability, price changes, termination).
- Data room with labelled folders and a two-page narrative tying metrics to value.
Want a 12–36 month exit plan tailored to your business? Contact Cannar M&A for a readiness assessment and 90-day action plan.
