An Open Letter to M&A Advisors and the Business Owners You Counsel

Over the past few years, I’ve sat on one side of the table evaluating nearly 300 lower middle market companies for acquisition. I’ve seen the good, the bad, and the ugly. The most frustrating pattern I’ve witnessed is not a lack of good businesses, but a fundamental lack of readiness. Too many great companies leave millions on the table—or fail to transact altogether—because they only start thinking about the sale a few months before they go to market.

This analysis is my answer to the question I know you get all the time: "What should I do to prepare my company for sale?"

The answer isn't a simple checklist. It's a strategic investment in financial leadership, made years in advance. For your clients, this isn't just an expense; it's the single highest-return investment they can make in their business. Here’s the data to prove it.

The First Test: Operational vs. "Cosmetic" Readiness

Before we even get to a Letter of Intent, we buyers are evaluating the quality of a company’s financial operations. This is where the story of the business is told, and frankly, it’s where most deals develop their first cracks. We can spot the difference between a truly well-run company and one that’s been cosmetically "cleaned up" for a sale in a heartbeat.

That’s why the concept of a foundational ROI is so critical. An analysis from CFO Advisors found that bringing in a fractional strategic finance professional can generate a 567% to 900% ROI within the first six months—long before a transaction is even on the horizon (8).

As a buyer, this is what that ROI tells me:

• You're Not Hiding Anything: Clean, timely financials show discipline and transparency. It immediately de-risks the deal in my mind.
• Your Projections are Credible: When you have a history of sophisticated forecasting and hitting your numbers, I'm more likely to believe the growth story you're selling.
• The Business Runs Itself: Strong financial controls and cash flow management prove that the business isn't entirely dependent on the owner. This is a massive value driver.

This immediate payback isn't about the transaction; it's about building a better, more resilient business. That is the bedrock of a premium valuation.

Putting a Price on Preparation: My ROI Model

When an owner asks if the investment is "worth it," you can now show them the exact math from a buyer's perspective. Let's model a typical 24-month engagement for a company doing $15 million in revenue.

The Investment

An experienced fractional CFO, or a Fractional Strategic Finance Professional (FSFP), for a business of this size typically costs between $3,000 and $15,000 a month on retainer (1, 5). We'll use a conservative average for our model.

• Monthly Retainer: $6,500
• Engagement Duration: 24 months
• Total Investment: $156,000

The Return

Here's how I, as a buyer, see the return on that investment manifest in the final valuation. We'll use a company with $15M in revenue and $2.25M (15%) in EBITDA as our case study.

• Vector 1: A Better-Run Business is Worth More. An effective FSFP finds efficiencies. A conservative 5% relative improvement in EBITDA margin adds $112,500 in annual profit. That's real cash flow that I am willing to pay a multiple on.
• Vector 2: The "Readiness Premium." A prepared company with clean books and no skeletons in the closet creates a competitive bidding process and removes risk. In my experience, this commands a 10-15% valuation premium (8). We'll use 12.5% for this model, applied to an average LMM multiple of 7.2x EBITDA (10).
• Vector 3: Getting the Deal Done. The data shows that 31% of LMM deals fail to close (12). My own experience confirms this. The number one deal killer is financial surprises during due diligence. A prepared company drastically reduces this risk. The data suggests this preparation leads to a 10.1% higher probability of a successful close.

The Final Calculation

Here is what the math looks like when you put it all together. This is the table I wish every owner would see two years before calling you.

My Concluding Advice to You and Your Clients

The numbers speak for themselves. The next time a business owner asks you how to prepare for a sale, the most valuable advice you can give is to stop thinking about a "sale" and start building a "sale-ready" business, today.

This analysis proves that investing in strategic financial leadership years in advance isn't a cost. It is a strategic imperative that creates a more resilient business and generates an exponential return at the closing table. Hand them this playbook. It’s the clearest, most data-driven answer you can possibly give.

Works Cited

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2. Fractional CFO Pricing: What You Should Expect to Pay - TGG Accounting, accessed September 22, 2025, https://tgg-accounting.com/fractional-cfo-pricing/
3. Fractional CFO Hourly Rates & Pricing Guide 2025 - Graphite Financial, accessed September 22, 2025, https://graphitefinancial.com/blog/fractional-cfo-hourly-rates/
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5. Hiring a Fractional CFO: How Much it Will Cost - Preferred CFO, accessed September 22, 2025, https://preferredcfo.com/insights/how-much-does-a-fractional-cfo-cost
6. How a Fractional CFO helps you value your business to exit, accessed September 22, 2025, https://www.mainstreetcfos.com/how-a-fractional-cfo-helps-you-sell-your-business
7. 5 Ways a Fractional CFO Will Generate Value for Your Business, accessed September 22, 2025, https://thecashflowcfo.com/5-ways-a-fractional-cfo-will-generate-value-for-your-business/
8. Fractional CFO ROI Calculator vs. Full-Time CFO Salary: A 2025 ..., accessed September 22, 2025, https://www.cfoadvisors.com/blog/fractional-cfo-roi-calculator-vs-full-time-cfo-salary_-a-2025-cost-benefit-walk-through-for-5-10-m-arr-companies
9. Lower Middle Market M&A: £5M-£50M Record Valuations - Dealflowagent, accessed September 22, 2025, https://dealflowagent.com/blog/lower-middle-market-ma-5m-50m-businesses-record-valuations
10. GF Data Report: Valuations Holding Firm, Despite Lighter Deal Flow in H1 2025, accessed September 22, 2025, https://middlemarketgrowth.org/gf-data-report-h1-2025/
11. M&A Readiness: How to Prepare Your Financials for a Successful Acquisition or Sale, accessed September 22, 2025, https://escalon.services/blog/finance/financial-prep-for-ma-success