Exit prep starts at week one.

Exit prep starts in week one of the deal. Not month thirty.

The IP chain of title. The customer contract assignability. The employment agreements. The cap table. The financial close cadence. Every one of those gets cleaned up easier when the platform is small than when the platform is in a banker's data room.

Exit prep is what separates a 6x outcome from an 8x outcome. The work starts before the banker.

The IP chain of title. Every piece of intellectual property in the platform (patents, trademarks, copyrights, trade secrets, software code) needs a clean chain of title from creation to the current owning entity. Most lower-mid-market companies have gaps. An engineer who developed key software was a contractor, not an employee. A trademark was filed under the founder's personal name. A customer-specific product was developed under a service contract with an ambiguous IP ownership clause.

At week one, these gaps are easy to fix. The engineer is still on staff and will sign an assignment. The founder is the seller and will assign the trademark. The customer contract can be re-papered as part of routine renewal.

At month thirty, the gaps are hard to fix. The engineer has left. The founder is no longer involved. The customer has been acquired by a strategic that does not want to re-open the IP discussion.

The banker's data room exposes the gaps to every prospective buyer. Each gap is either a price discount or a closing condition. Fix them in week one.

The customer contract assignability. Every material customer contract should be reviewed for assignability. At week one, customer contracts can be renegotiated. The renegotiation can be framed as a "standard contract refresh." At month thirty, restrictive assignability provisions in the data room are valuation discounts.

The employment agreements. Senior executives' employment agreements should include non-competes, non-solicits, IP assignment, confidentiality, and change-of-control protection balanced against retention bonuses. At week one, the executives are aligned with the deal. At month thirty, the executives have leverage. The negotiation is harder.

The cap table. The post-close cap table should reflect the LP equity, the sponsor commit, the rolled equity, the MIP pool, and any pre-issued profits interests. Clean, simple, documented. At week one, the cap table is fresh. At month thirty, it has gone through three add-on transactions and two MIP grant rounds. The reconciliation takes a week.

The financial close cadence. Monthly financial statements by day ten. Audited annually. Consistent chart of accounts. At week one, the new platform can establish the cadence from scratch. At month thirty, changing the cadence is expensive and disruptive.

If that discipline is in place from day one, exit prep at month thirty is a 90-day workstream that confirms what is already true. If it is not, exit prep is a six-to-nine-month workstream that fixes accumulated gaps.

The work starts in week one.