Deal Value Has Risen. Exit Readiness Starts Before the Buyer Calls.
- JConner
- 14 hours ago
- 4 min read
U.S. M&A deal value reached approximately $1.2 trillion during the first five months of 2026—nearly double the same period a year earlier—even as deal volume dipped 4%. Large transactions may be driving the headlines, but buyers and lenders still need support for earnings, working capital, debt, tax exposures, key contracts and the controls behind the numbers. A seller that begins preparing only after receiving an indication of interest has already surrendered time and negotiating leverage.
The Federal Trade Commission’s 2026 update to Hart-Scott-Rodino thresholds is one visible reminder that transaction requirements are date-sensitive. Many privately held transactions will fall below federal reporting thresholds, but every deal still has its own accounting, tax, legal, financing and diligence demands. Those requirements should be evaluated with the appropriate advisors early in the process.
Exit readiness is therefore not a single report. It is a coordinated effort to make the company’s financial story supportable, repeatable and easy to navigate.
Start with the Transaction & Exit Readiness Guide
JConner’s Transaction & Exit Readiness Getting-Started Guide provides a practical way to assess financial reporting, supporting documentation and management preparedness before a transaction becomes active.
Use the guide to begin the readiness conversation, identify information that should be organized and establish a focused 90-day starting plan.
Download the Transaction & Exit Readiness Getting-Started Guide
Seven exit readiness workstreams to address early
1. Establish a reliable monthly close
A buyer cannot evaluate trends confidently when reconciliations are incomplete, cutoff procedures vary or financial statements require repeated revisions.
Before entering a transaction process, management should establish a consistent close calendar, assign responsibility for key reconciliations and document significant estimates. The objective is not simply to close faster. It is to produce financial information that can withstand detailed questioning.
2. Build support for normalized earnings
Prospective buyers will distinguish reported earnings from the company’s expected ongoing performance.
Management should identify nonrecurring, owner-specific and unusual items well before diligence begins. Each proposed adjustment should tie to the general ledger, include appropriate documentation and have a clear business explanation.
Unsupported adjustments can undermine credibility—even when the underlying rationale is reasonable.
3. Analyze working capital before negotiation
Many purchase agreements establish a target level of working capital that the seller must deliver at closing. Waiting until negotiations begin to analyze the company’s historical working capital can create avoidable surprises.
The analysis should consider seasonality, receivable aging, deferred revenue, inventory reserves, customer deposits, accrued expenses and cutoff practices. Management should understand which balances fluctuate, why they fluctuate and how alternative definitions could affect transaction proceeds.
4. Clean the balance sheet
Old receivables, unreconciled cash, stale payables, shareholder-related balances, unsupported accruals and obsolete fixed assets tend to attract attention during diligence.
These items should be investigated and resolved where possible. If an item cannot be eliminated, the company should document its history, accounting treatment and expected resolution.
A clean balance sheet makes the diligence process more efficient and helps prevent minor issues from becoming negotiating points.
5. Reconcile operational and financial data
Buyers frequently request revenue and profitability by customer, location, service line, product or contract. Those reports should reconcile to the general ledger.
The same discipline should apply to headcount, backlog, recurring revenue and other operational measures used in the company’s story. Management should document definitions and prepare clear bridges between operational reports and reported financial results.
6. Organize the diligence file
A controlled diligence repository should be established before the request list arrives.
Common materials include financial statements, tax returns, debt documents, significant contracts, payroll information, insurance policies, litigation records, technology and compliance documentation, and related-party information.
Files should follow consistent naming conventions, clearly identify the applicable period and have an assigned owner. Access can be staged as needed, but version history and document control should be maintained throughout the process.
7. Test the story before the market does
Management should be prepared to explain customer concentration, margin changes, cash conversion, forecast assumptions and significant year-over-year movements.
A mock diligence exercise can identify inconsistencies between the company’s narrative and its supporting data. It also gives the team time to correct weaknesses before they affect buyer confidence or negotiating leverage.
Exit readiness questions for management
Can the company close its books accurately and consistently each month?
Are proposed earnings adjustments objectively supported?
Does management understand the likely working capital negotiation?
Do operational reports reconcile to the general ledger?
Is the diligence file organized, controlled and ready to update?
Can management explain significant financial and operational trends without reconstructing the analysis during diligence?
A strong deal story will not overcome inconsistent earnings, unresolved balance-sheet items or an incomplete diligence file. Exit readiness should begin before a buyer sets the timeline.
JConner’s Advisory team helps owners and finance leaders assess transaction readiness, strengthen reporting, organize diligence support and identify issues before they become buyer questions. Starting early allows the company to improve the underlying process—not simply prepare a response.
Access the Transaction & Exit Readiness Getting-Started Guide to begin identifying financial, operational and documentation gaps.
Explore the Advisory Resource Library for additional practical guides, checklists and tools designed to support stronger financial management and informed decision-making.
This article is provided for general informational purposes and does not constitute accounting, tax, legal or investment advice. Transaction requirements vary. Consult the appropriate professional advisors regarding your specific circumstances.
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