How Business Owners Can Prepare for a Capital Raise or Sale

Preparing a business for a capital raise or sale is one of the most important strategic exercises an owner will ever undertake. Whether you are looking to accelerate growth through outside investment or exit the business entirely, your company must be “investor‑ready” and able to withstand deep financial, operational, and legal scrutiny. Most deals succeed or fail not because of the pitch, but because the underlying fundamentals of the business are not prepared for due diligence.

Below is a comprehensive guide to ensure your business presents well, maximises valuation, and inspires confidence from investors or purchasers.

1. Get Your Financial House in Order

Clean, accurate financial statements

Investors and buyers expect three to five years of financial statements that are:

• Accurate

• Consistent

• Prepared (preferably) by a reputable accountant

• Supported by clear documentation

Messy financials slow down deals and reduce valuation. If your books aren’t already in strong shape, have them professionally reviewed or audited before going to market.

Strengthen your balance sheet

A clean balance sheet tells investors your business is stable. Key considerations include:

• Resolve old liabilities such as unpaid taxes, overdue creditors, or shareholder loans.

• Reconcile intercompany accounts, many of which raise red flags.

• Write off obsolete inventory or bad debts.

• Clarify asset ownership, especially where vehicles, equipment, or IP assets are held personally by shareholders.

Understand your normalised EBITDA

Investors and buyers look at normalised EBITDA (earnings adjusted for one‑off or non‑commercial expenses). Common adjustments include:

• Owner salaries taken above or below market

• Non‑recurring legal or consulting costs

• Personal expenses run through the business

These adjustments often have a meaningful impact on the valuation formula, making it critical to prepare a clean, defensible EBITDA profile.

2. Strengthen Your Tax Position

Tax surprises can kill investor confidence and derail deals late in the process. To avoid this:

• Conduct a pre‑sale tax review with a specialist.

• Identify any GST/VAT issues, unfiled returns, or payroll inconsistencies.

• Clarify treatment of shareholder drawings, dividends, and historical losses.

• Ensure that all tax positions are well documented and align with the company’s financial statements.

If you are planning a sale, get advice early—certain tax restructurings must be done well before negotiations begin to be effective.

3. Protect and Formalise Your Intellectual Property

Intellectual property (IP) is often one of the most valuable components of a modern business—but it is frequently poorly documented.

Key steps to prepare your IP before a raise/sale:

• Register trademarks, logos, trade names, and key brand assets.

• Ensure all software, creative work, product designs, and marketing assets are owned by the company—not contractors or founders personally.

• Review employment and contractor agreements to ensure IP assignment clauses are included.

• Document any trade secrets, proprietary processes, or algorithms in a defensible format.

• If technology is central to your business, ensure code repositories, version control systems, and licensing arrangements are clean and auditable.

Strong IP governance can materially increase valuation, reduce investor risk, and prevent last‑minute deal collapse.

4. Audit Your Customer, Supplier, and Operational Data

Customer database

Investors place huge value on customer metrics such as:

• Customer acquisition cost (CAC)

• Lifetime value (LTV)

• Retention and churn rates

• Segment-level profitability

• Contract terms and renewal cycles

Make sure your CRM is accurate, up‑to‑date, and able to produce reliable reports.

Supplier and operational documentation

• Ensure key supplier agreements are current, legally sound, and assignable upon sale.

• Catalogue assets, maintenance schedules, warranties, and leases.

• Prepare clear SOPs (standard operating procedures) for key processes—buyers value businesses that can operate without the founder present.

Data protection and privacy

If customer data is a key asset, ensure that:

• Privacy policies are compliant with applicable laws.

• Personal data is securely stored and permissioned.

• Data-sharing with third parties is properly documented.

Privacy gaps are a serious due diligence concern for modern investors.

5. Strengthen the Management Team and Reduce Founder Dependence

A business that relies heavily on the owner attracts fewer offers and lower prices.

To reduce key-person risk:

• Delegate relationships with key customers and suppliers to senior staff.

• Establish a clear governance structure (board, advisors, reporting lines).

• Ensure critical knowledge is documented and teachable.

• Build incentives to retain top employees post-transaction (options, bonuses, or continuity arrangements).

Investors want to know the business can succeed without its founder’s daily involvement.

6. Clarify Your Legal Documentation

A clean legal file accelerates deals dramatically. Assemble and review:

• Company constitution and shareholder agreements

• Cap table and historical share issuances

• Employee and contractor agreements

• Leases, finance agreements, and asset ownership documents

• Licenses, consents, and regulatory approvals

Ensure there is no outstanding litigation, compliance breaches, or unresolved disputes. Any such issues should be disclosed early, framed appropriately, and (where possible) remedied before going to market.

7. Prepare a Clear Growth Story

Capital raise investors want a compelling future. Buyers want to understand the upside after acquisition.

A strong growth narrative includes:

• Market size and trends

• Competitive differentiation

• Achievements to date

• Clear financial projections with assumptions

• Key milestones and how capital will be allocated

• Risks and how they are mitigated

A transparent, realistic, data-backed growth plan builds trust and helps justify valuation.

8. Get Investor-Ready Materials in Place

Before launching a raise or sale, prepare:

• A polished Information Memorandum (IM)

• A clear financial model

• An executive summary or teaser

• A due diligence folder with clean documentation

• A data room with indexed access

Streamlining this upfront dramatically reduces transaction friction and signals professionalism.

Conclusion

Preparing for a capital raise or business sale is a deliberate, structured process. It requires cleaning up financials, optimising operational systems, protecting intellectual property, ensuring tax compliance, clarifying your legal position, and articulating a strong future strategy. Businesses that invest in this preparation consistently achieve higher valuations, faster transactions, and significantly better investor engagement.

Whether your goal is growth or exit, the message is the same: start early, prepare thoroughly, and present a business that inspires confidence from day one.