Our books are reconciled monthly, but our exit advisor says our capital structure and credit positioning are unappealing to institutional buyers. How do we align our financial reporting and debt structures with the Step by Step Exit framework to ensure we pass the initial screens?

Question

Tyler Smith · Accepted Answer

Clean bookkeeping is just the starting point for due diligence. Institutional buyers look far beyond basic profit and loss statements. They look closely at your capital structure, working capital trends, and debt positioning to determine how much risk is baked into your business operations.

Under the Step by Step Exit framework, preparing your financial foundation requires a proactive shift in how you manage your balance sheet. First, you must clean up any owner-related debt, personal guarantees, or intercompany loans that complicate your capital structure. A buyer wants a clean slate, not a tangled web of personal and business liabilities.

Second, you need to establish institutional-grade credit positioning. This means having well-structured, formal lines of credit with primary banking institutions that can be easily assumed or replaced by a buyer without disrupting operations.

Third, use your weekly EOS Scorecard™ to track key financial health metrics, such as your working capital peg and debt-to-equity ratio. Showing a buyer a history of consistent, optimized working capital management proves that you run a disciplined operation.

By addressing these financial and credit dimensions on your runway, you remove major red flags that cause buyers to discount their valuation or back out of a deal entirely. You present a professional, derisked financial profile that passes institutional screens with ease.