CLEAN Series

Is Your Business Exit-Ready? Use the CLEAN Scorecard to Find Out.

Most business owners say they’ll sell when they’re ready. But the truth is, it’s not about when

you’re ready—it’s about when your business is. That’s where the CLEAN Scorecard comes in. CLEAN stands for:

Cash Flow Leadership Earnings Assets Next Steps.

It’s a simple but powerful framework we use to help business owners assess how ready their business is for a sale—and what they can do to boost valuation and buyer interest.

What Is the CLEAN Scorecard?

The CLEAN Scorecard evaluates your business across five critical areas that buyers care about most:

Cash Flow – Revenue is vanity. Profit is sanity. But cash is survival.

When we assess a business’s cash flow, we’re not looking for steady sales—we’re looking at how well cash moves in and out of the business. That means measuring Days Sales Outstanding (DSO), Days Payables Outstanding (DPO), and whether the company can grow without burning through working capital.

If your business is growing fast but collecting slowly—or worse, paying vendors faster than customers pay you—you may be growing yourself into a cash crisis.

Buyers notice this. In fact, one of the first things a financial buyer will do is calculate your working capital cycle to gauge how risky your growth is.

A CLEAN business has:

Timely collections and clear accounts receivable discipline
Terms with vendors that support positive cash conversion cycles
Realistic growth that doesn’t rely on constant infusions of owner cash or outside financing

Leadership – A business that requires the owner every day isn’t a business—it’s a job with overhead.

When evaluating leadership readiness, buyers ask:

“What happens if the owner disappears for 30 days?”

If the answer is “everything grinds to a halt,” value takes a hit—or the deal dies entirely. The more your business relies on you for decision-making, customer relationships, pricing, or even production, the harder it is to transition and scale.

On the flip side, businesses with strong mid-level management, clear decision rights, and

documented SOPs signal that they are transferable, scalable, and low risk. Indicators of leadership readiness:

A clear org chart with accountable roles
Delegated decision-making authority
A leadership team that manages day-to-day operations, not just the owner

Earnings – Every seller thinks their business is worth more than it is. But buyers look past the

tax returns and dig into the quality of earnings.

This isn’t just about how much money the business makes—it’s about how reliable, recurring, and normalized that money is.

Key earnings questions buyers ask:

Are profits tied to a few clients or contracts—or are they diversified?
Are there valid and documented add-backs (e.g., personal perks, one-time expenses)?
Are there early signs of customer churn, margin compression, or input cost risk?

A strong earnings profile means:

Adjusted EBITDA or SDE is well-supported
Revenue sources are diversified and predictable
Margins are healthy and consistent with best-in-class peers

This is where many businesses look good at a glance—but fall apart under due diligence.

Assets – Assets only add value if they are owned or controlled, transferable, and serviceable. A shiny equipment list means nothing if the machines are obsolete, overloaded, or undocumented.

Buyers evaluate assets not just as static items on a depreciation schedule, but as operational levers. They want to know:

Are these assets reliable?
Can they support current or future growth?
Will I need to replace or upgrade them immediately after closing?

Key areas of focus include:

Age & Condition: Are key machines, vehicles, or systems nearing end-of-life?
Maintenance History: Are service records available? Has proactive care been taken—or just reactive fixes?
Capacity Utilization: Is the business operating near asset limits, or is there headroom for scaling?
Obsolescence Risk: Are systems or technologies still supported, or becoming outdated?

Also important:

A clear asset register, with ownership and depreciation tracked
Confirmation of what’s leased, owned, or personally held by the seller
IP (logos, websites, software licenses) properly assigned to the business entity

A CLEAN business demonstrates that its assets are:

Necessary for operations
In good working order
Readily transferable without legal or operational disruption

Otherwise, what looks like a strength on paper can quickly become a buyer concern—and a cost to them, post-close.

Next Steps – Most owners say they’ll sell “in a few years”—but very few can explain how, to whom, or why a buyer would want the business in the first place.

The “Next Steps” category evaluates whether the business is positioned not just to transfer ownership, but to support the next chapter of its growth—with or without the current owner.

A serious buyer wants to see:

A credible growth strategy with supporting metrics
A clear transition plan for leadership, ownership, and customer continuity
Clean legal structure, proper documentation, and a realistic view of valuation

Critically, a seller should be able to articulate:

“Here’s where we’ve been, here’s where we’re headed, and here’s how you (the buyer) can take it even further.”

Even if the buyer changes course later, the presence of a coherent and achievable plan reduces perceived risk. It tells the buyer:

The business isn’t stagnant or running on autopilot
The current owner is thoughtful and organized
The opportunity has upside beyond the current financials

A strong “Next Steps” readiness profile includes:

SOPs, contracts, and clean books in place
Exit timeline and role expectations clarified
A forward-looking strategy rooted in past performance and market reality

Without this? You’re just hoping the buyer imagines what comes next—and in M&A, hope is not a strategy.

Each section includes three key questions, scored from 0 to 2 points. The maximum score is 30. Your total reveals how prepared your business is—and what kind of exit outcome you can realistically expect.

How to Interpret Your Score

Score Range	Exit Readiness	What It Means
0–14 🔴	Not Exit Ready	Major risks, high owner dependence, poor documentation. A sale today would be deeply discounted—or fall apart.
15–20 🟠	Risky but Possible	Some positives, but lingering gaps. Expect a long process and lower valuation.
21–26 🟡	Exit Ready	Most elements are in place. With polishing, you’re likely to attract buyer interest.
27–30 🟢	Premium Ready	High buyer confidence, faster deal timelines, and better terms.

Why This Matters

Too many owners wait until they’re burned out, or until something forces their hand—illness, family changes, or market shifts. At that point, there’s no time to fix what’s broken. And buyers can tell.

By scoring your business now, you put yourself in control. You can identify weak points, invest strategically, and time your exit for maximum return.