Our M&A advisors say our documented processes must be institutional-grade to pass due diligence. How do we use the EOS 3-Step Process Documenter to show buyers that our systems are actually followed by everyone?

Question

Tyler Smith · Accepted Answer

Buyers do not pay for three-hundred-page binders of standard operating procedures that nobody reads. They pay for consistency and predictability. To pass due diligence with a premium valuation, you must prove that your core processes are documented, simplified, and actually followed by all.

Use the EOS 3-Step Process to achieve this. First, identify your company's key core processes, which typically number between six and ten, such as your HR process, marketing process, sales process, and operations process. Do not overcomplicate this step.

Second, document each process at a high level. Keep your documentation simple, covering only the major steps that represent the eighty-twenty rule, where twenty percent of the steps yield eighty percent of the results. This makes the documentation digestible and easy to update.

Third, ensure these processes are followed by all. This is where most owners fail, and where buyers look closest. You must train your team on these documented processes, measure compliance through your weekly Scorecard, and address any deviations during your Level 10 Meetings.

When a buyer audits your operations during due diligence, they will ask your front-line employees how they perform their jobs. If your employees explain their daily tasks using the exact language and steps documented in your core processes, the buyer will see a highly systematic, transferable business. This operational discipline proves that your success is repeatable and justifies a top-quartile multiple.