The five-category readiness assessment.

The readiness assessment is what comes after the objectives survey and the Critical Decision Factors have named the viable paths. It does not tell you whether you will get a good price. It tells you whether you are ready to get the best price your path will support — and if not, exactly which gap is suppressing value and how long it will take to close it.

The composite is directional. It is not a valuation, not a guarantee, and not a substitute for the Book Valuation Engine's actual range. It is a triage tool. Score yourself honestly across the five categories below and the priority order of remediation work falls out cleanly.

§ 01 · The three paths, before the scoreInternal, external, hybrid.

Every perpetuation falls into one of three strategic categories. Each one has a different readiness profile — what scores 8/10 for an internal sale may score 5/10 for a PE process, and vice versa.

The internal path.

Transfer to existing owners, family, or key employees. Requires succession planning, buyer financing, and a gradual transition timeline. Most owners default to "I'll sell when ready" without evaluating whether an internal buyer actually exists who is interested, capable, and financially able to transact. The absence of a candidate — or the presence of one who is underdeveloped or undercapitalized — is the most common structural reason agencies pivot to external sales.

The external path.

Sale to an outside buyer — strategic, financial, or aggregator. Market timing matters; valuation maximization is the goal; the process is typically competitive. Cash at close runs 50–100% of total consideration depending on buyer type, with the headline multiple decomposing into cash, earnout, seller note, and rollover equity in different proportions.

The hybrid path.

Partial sale with retained ownership, staged exit, or a Slices listing strategy. Structurally the most complex but allows phased liquidity and risk mitigation. Cash at close runs 25–70% with the balance carried as seller note or earnout.

§ 02 · The five categories, weightedWhy these weights, in this order.

The composite score weights five categories deliberately. The weights reflect what buyers actually price into a multiple, not what sellers find easiest to talk about.

Financial readiness — 25%.

Clean books, three years of normalized P&Ls, identifiable add-backs. Carries the highest single weight because buyers cannot value or finance an acquisition without credible financials. The reason this category is 25% and not 20% is that everything downstream — multiple, structure, deal certainty — sits on top of it. Below 6.0 on Financial means below 6.0 overall regardless of the other four.

Operational readiness — 20%.

SOPs documented, AMS data clean, staff capable of running the agency independently. Together with Financial Readiness it constitutes 45% of the score — the "table-stakes" half. Both can be materially improved inside 12–18 months of focused effort, which is why they receive the most priority in compressed-timeline cases.

Succession planning — 20%.

Successor identified or buyer-type defined; transition plan in place. The structural twin of Operational Readiness. The challenge with Succession is that internal succession takes 3–7 years — not improvable in a 12-month window. Sellers who arrive here late typically shift the entire weight of this category from "develop a successor" to "identify the right external buyer type."

Owner alignment — 20%.

Objectives clearly defined, price expectations calibrated to market, transition commitment articulated. This is the seller-side behavioral factor that most often derails deals late in the process — when the buyer has built confidence in the financials but the seller surprises them on terms, timeline, or post-close role. Resolvable quickly (weeks, not years), but only once the seller commits to the process.

Market timing — 15%.

The lowest weight because it is the least controllable. Market timing matters — but waiting for a better market is rarely the right move. The market clears where it clears; what you control is whether your book arrives as an investment-grade asset or as a fixer-upper.

§ 03 · The 6.0 / 7.5 thresholdsWhat the composite actually means.

The composite is a 1–10 weighted average. Two thresholds carry real weight in practice.

A composite under 6.0 indicates material gaps. The seller should not enter a competitive process at this score; they should remediate first. Going to market under 6.0 invites retrading, stricter terms, and buyer skepticism that the financials are even reliable.

A composite at 7.5 or above indicates a credible go-to-market position. Not a guarantee of the top multiple, but a position from which the seller can credibly hold the multiple their book supports. Most premium exits we see clear 8.0 or higher.

Below 6.0 means "do the work first." Above 7.5 means "you can go to market and hold your line." Between is a judgment call — and judgment requires the runway honest scoring forces you to confront.

§ 04 · The deal enablers and the deal killersEight up, eight down.

Behind the composite, two specific lists determine whether a deal gets done and at what price. Buyers reward the enablers and penalize the killers on every transaction, regardless of headline multiple.

The eight enablers.

Clean financials (3+ years); diversified client base; strong carrier relationships; documented SOPs; low owner dependency; staff continuity commitments; realistic price expectations; flexible deal terms. None of these surprise an operator with experience. All of them are improvable in 12–24 months of disciplined work.

The eight killers.

Owner concentration above 25% of production; client concentration above 10% from a single client; key-employee flight risk; carrier-relationship concerns; pending litigation or E&O claims; trust-position irregularities; unrealistic price expectations; seller unwilling to transition. Any one of these will materially compress the multiple or kill the deal entirely. Trust irregularities and seller-expectation gaps are the two most common deal terminators we see.

§ 05 · The compressed-timeline pivotIf you don't have the runway, what do you fix first.

The readiness model above assumes a normal 3–5 year runway. For sellers who arrive at this Tactical late — two to three years of recoverable runway — the prioritization changes but the framework still applies.

First — Financial (25%).

Three years of clean, recast P&Ls with documented add-backs can be achieved with focused CPA engagement inside 12–18 months. Without this, no buyer can finance the transaction at a credible price. First priority, no exceptions.

Second — Operational (20%).

Twelve months of focused effort — SOP documentation, cross-training, reduced owner-producer dependency — materially improves buyer perception and shrinks the urgency discount. The Vacation Test is the milestone.

Structurally constrained — Succession (20%).

If internal succession requires 6–10 years and you do not have it, this category shifts from "develop a successor" to "identify the right external buyer type." The work is real — it just changes content.

Resolvable quickly — Owner Alignment (20%).

Objective clarity and calibrated price expectations can be achieved in weeks once the seller commits to the process. The Critical Decision Factors and the 12-dimension survey are the inputs.

Accept — Market Timing (15%).

Not controllable. Accept current conditions; do not defer further. The market is what it is when you reach it.

Financial (25%) plus Operational (20%) equal 45% of the score, and both are materially improvable inside a 2–3 year window. These are where a late-arriving seller concentrates effort. Succession and Owner Alignment are either structurally constrained or quickly resolvable; Market Timing is exogenous.