How Readiness Actually Gets Scored
Readiness is scored on two things, the business and the money, from evidence rather than from the owner's account of them. A claim without a date behind it scores as a claim. The result is a plain-language position and a date, not a percentage, and it is scored again every six months so the owner can see which way it is moving.
For twenty-nine issues this newsletter has described what a buyer finds. What gets priced, what gets discounted, what stops a sale. Readers have told me it changed how they see their companies, and a few have told me it kept them up at night.
What I have almost never described is how I work. That was deliberate for a while, and it has stopped being useful. An owner who agrees there is a problem and has no idea what the procedure looks like does not act. So this week is about method.
Two things get scored, and one does not
Readiness is scored on two dimensions. The business, meaning whether what makes it valuable survives the owner leaving. And the money, meaning whether the record a buyer and a lender will rely on supports the price the owner has in mind. Those two carry equal weight, because a buyer will discount for either one and does not care which.
There is a third dimension, and it is not scored. It is the owner personally. Whether there is a life after the business, what the sale has to produce after tax to fund it, who the owner is once the title is gone. Those questions are real and I ask them, but they do not go into the score. They sit above it. The personal plan tells the financial plan what it has to produce, and the financial plan tells the business what it has to be worth. Scoring them would be scoring the wrong thing.
Evidence, not account
The second thing to understand is what counts.
Every owner can describe their company. The description is almost always sincere and almost always better than the evidence. That is not dishonesty. It is the ordinary gap between what an owner knows to be true and what a stranger can verify, and it is exactly the gap a buyer's diligence team is paid to find.
So the score is built from what can be shown. Contracts, not the relationship. The renewal rate for each of the last three years, not the sense that customers are loyal. The written process, not the fact that everyone knows how it is done. The monthly close, not the year-end clean-up. Where an owner says something is true and there is nothing to show for it, the item scores as unproven. Not as false. Unproven. The buyer will treat it the same way.
Since when
The third thing, and the one that surprises people, is that the date matters as much as the fact.
For nearly every item, I ask not only whether it is true but since when. A general manager who has run the company for four years is a different fact from one who took over in the spring. A maintenance agreement base that has been on automatic renewal since 2022 is a different fact from one moved there last quarter. Clean monthly books for three years are a different fact from clean books since the owner decided to sell.
The reason is simple. A buyer reads history. A lender reads history. Issue #22 explained why the clocks cannot be compressed, and the scoring reflects it: an improvement made this year counts for less than the same improvement made three years ago, and it keeps gaining weight as it ages. That is not a penalty. It is the single most useful thing an owner can know early, because it means the work done now is the work that will be worth the most on the day of the sale.
What comes out
Owners sometimes expect a number. A percentage, a grade, something to put on the wall.
There is arithmetic underneath, and it is the same arithmetic every time, which is what makes two companies comparable and makes the same company comparable with itself a year later. But the arithmetic is not what the owner receives. What the owner receives is two things.
The first is a position, in plain language. Where the company stands today against what a buyer will verify, which items are holding the price down, and which of those can be fixed by changing the records rather than the operation. Issue #28 made the point that four of the six things a buyer checks first are records. The scoring says the same thing, item by item, for the owner's own company.
The second is a date. Given what has to be fixed and how long each fix has to age before a buyer will give it full weight, the earliest date on which the company can be sold without a discount the owner would regret. That date is the whole point. A range of value is useful for curiosity. A date is useful for a decision.
It is scored again
One more thing, because it separates a scoring method from a report.
The score is not taken once. It is taken again every six months while the work is under way. The arithmetic does not change between readings, which means the only thing that can move the result is the company. An owner sees the position, sees it again six months later, and sees which way it is moving and how fast. The date moves with it, usually closer.
That is the part of the method I would defend most strongly, because it is the part that turns advice into a measurement. Anyone can tell an owner what is wrong. Showing an owner, twice a year, that it is becoming less wrong is a different kind of service.
Where it starts
Scoring a company properly takes records and a few weeks. It does not start there. It starts with the value gap estimate, which asks for no financial statements and takes about fifteen minutes. I review every one personally and send the result, and the result tells us both whether a full scoring is worth doing.