The most common exit conversation we encounter starts with the same sentence: we'll begin preparing once the numbers stabilise. The logic feels sound. Why prepare a company for sale when it is mid-recovery, when the next quarter could disrupt the story, when the management team is still absorbing change?
In our experience, this logic is exactly backwards. By the time the numbers look stable, the variables that determine the outcome of a sale have already been set. The buyer's diligence will not be looking at the snapshot. It will be reverse-engineering the trajectory — and the trajectory is built in the eighteen months before anyone admits a transaction is being considered.
The 2026 backdrop makes the point more concrete. McKinsey's review of global private equity records over sixteen thousand buyout-backed companies held for more than four years — roughly half of the global inventory — with continuation funds and GP-led secondaries playing a larger role in how exits actually happen. In that environment, exit readiness is no longer a discrete project that begins when a sale is decided. It is a discipline that runs through the long hold, because every quarter of recovery is already part of an eventual diligence file, whether the buyer turns out to be a strategic, a sponsor, or a continuation vehicle.
1. Buyers price the path, not the level
Sophisticated buyers — strategic acquirers, sponsor-backed platforms, secondary funds — do not pay for current EBITDA. They pay for the conviction that earnings will continue and grow under their ownership. That conviction is built from evidence of trajectory: how the company recovered, how it absorbed shocks, how predictable its operations have become, how its management team behaved when conditions were difficult.
A company that walks into a process with a clean recent quarter and a chaotic eighteen-month history will be priced on the chaos. A company that walks in with a coherent recovery story — variance detection that worked, decisions that were made on time, a Board that understood the situation — will be priced on the recovery. The distinction the buyer is making is not whether the company had bad quarters. Every company has bad quarters. The distinction is whether those quarters were read in time, communicated to the Board honestly, and corrected with discipline. A crisis handled well is less expensive, in a valuation, than a stable quarter handled poorly. The difference, on a typical mid-market deal, is significant. It is also entirely set before the data room opens.
2. Earnings quality is built, not produced
Buyers and their advisers will spend most of diligence trying to separate one-off effects from structural ones. Every adjustment a company asks the buyer to make — to normalise for non-recurring items, to bridge to a clean run-rate, to explain a reporting change — increases the discount. The moment the buyer starts reconstructing earnings quality from raw data is the moment confidence in the underlying reporting drops. After that point, every subsequent number requires defence.
Companies that prepare well do this work months in advance. Non-recurring items are identified and disclosed before the buyer asks. Reporting cycles are tightened so that the run-rate is visible without explanation. KPIs that the management team uses internally are the same ones the buyer will see. The narrative is consistent across the CFO, the CEO, and the Board, because they have been working from the same picture for two years, not because they prepared together for a presentation.
3. Governance is read before the model is opened
Diligence is, in part, a governance audit. The buyer is asking whether this company can be operated without the seller present, whether the management team will deliver under new ownership, whether the reporting can be trusted, whether the Board has been informed or insulated. A company that cannot answer these questions cleanly will be valued accordingly — or, more often, will see the deal slow until it stalls.
This is the work that cannot be done in the four weeks before the data room opens. Decision rights, cadence, accountability, the discipline of how the management team handles variances — these are habits, not artifacts. Sophisticated buyers do not trust answers, they trust mechanisms. They look at historical board packs, at how exceptions were surfaced in the months before the process started, at whether the management team's internal language about the business matches the one in the information memorandum. What can be staged is small. What is real is everything else.
What readiness looks like in practice
Companies that exit well have, eighteen months before the process: a clean separation between operational and exceptional items, a reporting cycle that the Board uses rather than receives, a working capital owner with authority, a management team that agrees on the operating reality, and a strategic narrative that explains the path the company has actually been on.
None of this requires waiting for stability. In fact, the stability is partly a product of the work itself — the same disciplines that prepare a company for a sale also tend to make the next quarter more predictable. The companies that delay readiness until they look ready usually arrive at the window with fragile data, defensive governance, and a narrative built in haste. The companies that start while still unstable arrive with the exit already half-priced into the operating system.
The mistake is to treat exit preparation as a transaction event. It is a governance event with a transaction at the end.
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References
- Global Private Equity Report 2026: Clearer view, tougher terrain, McKinsey & Company, February 2026.
- Cerved Industry Forecast: fatturati delle imprese italiane attesi in ripresa nel 2026, Cerved, January 2026.