The window is 12 to 18 months before a raise or an exit, and most founders start much later. The reasons are understandable. In a venture-backed company, the exit is part of the plan from the first pitch, so founders talk about it constantly, but as a destination rather than something to prepare for. The last round’s valuation starts to feel like the company’s value. Every stage of preparation gets aimed at the next raise, and that readiness feels like exit readiness. And every week brings problems that are urgent, while an exit never feels urgent until something forces it: runway gets short, the market turns, an acquirer calls, or the board starts watching the fund’s timeline. A founder who starts preparing at that point is negotiating from behind, on a buyer’s timeline, with no room to fix what the buyer finds. It happens often. In a 2026 BNY Wealth survey, deal advisors reported that only 48 percent of sellers are ready when buyer due diligence begins.
What Do Buyers Look for in Due Diligence?
A buyer does not value your company the way you or your investors do. An investor in a round bets on what the company could become. An acquirer prices what it is, and measures what the business can do without you. The examination covers a familiar set of areas: market position, financial health, operations and process, leadership and succession, and the strength of the customer base and its contracts.
Each of those areas tests something a founding team tends to stop examining. Market position tests whether the ideal customer you defined years ago is still the one paying you. Financial health tests margins that may carry the weight of custom work promised to land an early account. Operations test whether the company runs on process or on a few people who know how things work. Leadership tests what happens to the business when the founder steps out of the room. The customer base tests how much revenue depends on a handful of relationships.
None of these questions is new. What makes them hard is that the people inside the company stopped asking them long ago, because nothing about the answers seemed to change.
What Diligence Finds
Diligence is where most deals that fail come apart. Axial, which runs a deal platform for private-company transactions, reports that 70 percent of failed exits it sees are due diligence related. The findings rarely surprise anyone inside the company. They surprise the founders only because no one put them side by side until a buyer did.
In one case Axial published, a multibillion-dollar packaging company was evaluating an acquisition and knew that nearly half of the target’s revenue came from four accounts. Its diligence team interviewed those customers directly. The relationships turned out to be weaker than the target believed: the key customers did not feel like key customers. The acquirer cut its offer by 30 percent.
The backup company Backblaze came closer still. Its founders had accepted an offer and signed it, and diligence was under way. When the diligence period ended, the acquirer’s board refused to approve the deal as written. It wanted money moved from the upfront payment into an earnout, to make sure Backblaze’s executives would not leave once the deal closed. Backblaze declined, and the deal ended.
When Doubt Becomes Terms
Backblaze’s experience is common in venture-backed deals. A buyer’s doubt does not always lower the headline price. Often it moves part of the price into an earnout, paid only if the company hits targets after the sale. According to SRS Acquiom data reported by PitchBook, more than one in five acquisitions of venture-backed startups in 2025 included an earnout.
Those conditional dollars are worth less than they look. When an earnout pays anything at all, SRS Acquiom’s data puts the payout at about 50 cents per potential dollar. Every question a buyer cannot answer in diligence becomes a share of the price you may only half collect.
A Plan or a Discount
The difference is time, and it is why the early end of the window matters. Diversifying revenue away from a few accounts, repricing or retiring custom work, and building leaders who own the biggest relationships each take a year or more. Start at 18 months and you can finish that work before a buyer looks. Start at six and the best you can do is explain it. Found early, those gaps are a plan. Found during diligence, they are a discount.
Readiness Is Not a Plan to Leave
Preparing for an exit does not mean you intend to sell soon. The things that make a company attractive to a buyer are the things that make it stronger to run now: margins that hold, revenue that doesn’t depend on one account, a leadership team that can make decisions without the founder, processes that live somewhere other than people’s heads. An exit-ready company gives its founders options, and options are what let you choose your timing instead of having it chosen for you.
See It the Way a Buyer Will
The hardest part of exit readiness is seeing your company from the outside. A buyer arrives as a stranger with fresh eyes, and sees in weeks what the people closest to the business have stopped seeing over years. The founders who exit well are the ones who looked first.
A buyer will test two things: whether the people inside your company agree on what’s true, and whether the market agrees with them. Every York Effect Sprint tests the same two things. Run that test early and you have time to act on the answer.
A buyer will find every gap in your company. Find them and fill them first.
