The pre-LOI readiness conversation is a structured discussion an advisor has with a seller before going to market — its purpose is to surface owner dependency, concentration, and financial gaps early, while there's still time to fix them and protect the eventual fee. The deals that die in diligence almost always carried their fatal flaw before the LOI was ever signed. Raising readiness early isn't a delay tactic; it's how you stop investing months into a deal that was never going to close.
Why this conversation belongs before the LOI
Once an LOI is signed, the clock starts and the gaps are locked in — diligence will find what's there, and there's no time left to fix it. Everything fixable has to be addressed before you go to market. The pre-LOI conversation is your one window to identify whether a client is genuinely ready or carrying a deal-killer, and to act on it while action still changes the outcome. (When to refer to readiness vs. go to market →)
The four areas to probe
You're not running diligence — you're sensing where diligence will find problems. Probe four things:
- Owner dependency. How much of the business runs through the client personally — relationships, decisions, delivery?
- Revenue concentration and durability. How much rides on the top one to five customers, and is it contracted or relationship-based?
- Financial readiness. Are the books clean and normalized, or will a Quality of Earnings review find surprises?
- Transferability. Are the key contracts, IP, and agreements actually assignable to a buyer?
Each is a place deals predictably die. (Where deals die in the diligence timeline →)
How to frame it without scaring the client off
The risk is that "your business has problems" sounds like "I don't believe in your deal." Frame readiness as advocacy, not doubt:
- Anchor on their outcome: "My job is to get you the best terms a buyer will pay — so let's make sure a buyer sees what you see."
- Use the buyer's lens, not your judgment: "Here's what a buyer's diligence team is going to check…"
- Normalize the gaps: "Almost every owner-led business has two or three of these. Finding them now is how we protect your price."
A script you can adapt
Opening: "Before we talk price and timing, I want to walk through what a buyer's diligence team will examine — so nothing surprises us later. Surprises in diligence don't get negotiated; they get priced. I'd rather we find them now, while we can still fix them."
Owner dependency: "If you stepped away for two months, what breaks? Who do your top clients call — you, or the company?"
Concentration: "What share of revenue is your largest client? Your top five? Are those relationships contracted, or based on trust in you?"
Financials: "If a buyer's accountants rebuilt your earnings line by line, what would they find — personal expenses, add-backs we can't document, a lumpy year?"
Transferability: "Can your key contracts be assigned to a new owner? Any change-of-control clauses or IP that lives with a contractor?"
The bridge: "Here's my read: you're strong on X and Y, but A and B are exactly where a buyer pushes back. If we close those before we go to market, you protect both the price and the odds of closing at all. I work with a readiness partner who does exactly this — and you'd come back to my process deal-ready."
What to do with the answers
Two or three soft spots are normal — note them and decide whether they're fixable pre-market or manageable in the deal. But when a client is heavily owner-dependent, concentrated, or has books that won't survive a QoE, that's a readiness referral, not a listing. Taking that client to market now risks a dead deal and a damaged relationship; preparing them first protects both. (The referral economics of a deal-ready client →)
Give clients a fast, objective read. The Exit Readiness Score scores a client across all eight diligence dimensions in five minutes — a low-friction way to open this conversation with data instead of opinion. See the readiness lens →
Frequently asked questions
How do I prepare a client for a business sale?
Before going to market, walk the client through what a buyer's diligence team will examine — owner dependency, revenue concentration, financial readiness, and transferability — to surface deal-killers while there's still time to fix them. Frame it as protecting their price, not doubting their business.
When should I raise readiness with a seller?
Before the LOI. Once an LOI is signed, the diligence clock starts and the gaps are locked in. The pre-LOI window is the only time fixes can still change the outcome.
How do I talk about readiness gaps without losing the client?
Frame readiness as advocacy: anchor on their outcome, use the buyer's lens rather than your judgment, and normalize the gaps as something almost every owner-led business carries. Position fixing them as protecting both the price and the odds of closing.
What if a client isn't ready to go to market?
A heavily owner-dependent or concentrated client with books that won't survive a Quality of Earnings review is a readiness referral, not a listing. Preparing them first protects your fee and the relationship better than taking a deal that's likely to die in diligence.