Our exit advisor mentioned that our capital structure and credit rating could impact our enterprise value just as much as our EBITDA. How do we clean up our credit profile and financial foundation on our exit runway?

Question

Tyler Smith · Accepted Answer

A buyer is not just evaluating your earnings; they are evaluating the financial risk of your balance sheet. Under the Step by Step Exit framework, we analyze your financial health across several key dimensions, including your credit profile and financial foundation. During your exit runway, you need to systematically clean up your capital structure. This means eliminating any outstanding shareholder loans, resolving historical tax liabilities, and streamlining your debt obligations. You must also work with your finance department to build a robust credit profile that is independent of your personal guarantee. Buyers look closely at your working capital requirements and credit terms with vendors. If your business relies on your personal credit to secure terms, a buyer will see this as an immediate transition risk. Cleaning up these areas on your runway ensures that the transition of ownership is seamless and that your capital structure is solid, protecting your proceeds at close.