Veteran Business Owners: How to Prepare Your SDVOSB for Sale: The 24-Month Runway
- Erik James Roberts, Founder & Chief Investment Officer | Infinitus Wealth Management
- 9 hours ago
- 7 min read
Erik James Roberts — Founder & CIO, Infinitus Wealth Management. Purple Heart recipient, Wharton MBA.
To prepare your SDVOSB for sale, start roughly 24 months before going to market and work four fronts in parallel: make the business run without you, get your financials diligence-ready, position your contract portfolio for maximum runway, and commit your key people through the transition. Every one of those takes months of visible history to be credible — which is exactly why the founders who start early capture value the ones who start late leave on the table.
The last article in this series covered when to sell — contract cycles, option years, and market windows. This one covers what to do with the runway once you've marked the date. The encouraging truth about exit preparation is that almost everything on the list is within your control, most of it makes the business stronger whether you sell or not, and the payoff compounds: a company that has spent two years becoming easier to buy walks into diligence with a story the documents confirm instead of one the founder has to keep explaining.
Why Start Two Years Before Going to Market?
Because buyers don't buy claims — they buy track records, and track records take time to exist. A delegation plan you launched last quarter is an intention. The same plan, running for eighteen months with contracts renewed and customers retained under your leadership team, is a verifiable fact. Diligence teams will spend 60 to 90 days testing everything you've told them; the preparation window is what determines whether that process confirms your story or renegotiates your price.
The math of the calendar makes the case on its own. A typical sale process runs six to nine months from engaging an advisor to closing. Work backward from a target closing date and the "quiet" preparation phase — the part nobody outside the company sees — is really only 15 to 18 months. That's enough time to build a year-plus of history on every major fix, and not much more. Two years out is not conservative; it's exactly on schedule.
There's a second reason to prepare your SDVOSB for sale on this timeline: optionality. A business that's ready to sell doesn't have to. Every item on the runway — stronger leadership bench, cleaner books, balanced revenue, longer contract runway — makes the company more valuable to keep, more resilient through a surprise, and better positioned if an unsolicited offer arrives early. Preparation doesn't commit you to an exit; it gives you the standing to say yes, no, or not yet on your own terms.
How Do You Prepare Your SDVOSB for Sale? The Four Workstreams
Everything on the 24-month runway rolls up into four workstreams. They run in parallel, and each answers a question every buyer will ask.
1. Make the business run without you
The single largest value driver you control. In most founder-led government contracting firms, the agency relationships, the pricing decisions, the proposal strategy, and the delivery escalations all route through one person — and that person is about to leave. Buyers see that clearly, and they price it. The remedy is delegation with a paper trail: named leaders who own specific contracts and customer relationships, who show up in the CPARS narrative, who sit across from contracting officers without you in the room. The buyer's test is simple: could the founder step away for a month with nothing slipping? Build toward a "yes," then let it run long enough to prove itself.
2. Get the financials diligence-ready
Buyers price businesses on adjusted earnings, and the bridge from your reported numbers to that adjusted figure is built from documentation. Owner compensation normalized to market rate, one-time expenses identified, personal and non-recurring items separated — each adjustment you can support with receipts survives diligence and adds to the number deals are priced on. Each one you can't gets struck. Eighteen months out is the time to move to clean, consistent books, ideally reviewed by a CPA who knows government contracting, and to start keeping the file that supports every adjustment. Many sellers also commission their own quality-of-earnings review before going to market; finding your own surprises first is far more pleasant than having a buyer find them for you.
3. Set the contract table
Your contract portfolio is the product, so arrange it deliberately. Build the recompete calendar first — every contract, every option exercise date, every follow-on — because that calendar drives your go-to-market timing, as covered in the timing article. Then work the composition. Strong CPARS ratings are your externally verified report card; if a rating is below where your performance deserves, the response process exists for a reason. Revenue balance matters too: many buyers look hard at any single contract carrying more than roughly a third of revenue, so two years is enough time to grow a second anchor or broaden the base. And if a healthy share of your work is set-aside dependent, the runway is your chance to build the past performance that competes full-and-open — the topic the set-aside status article treats in depth.
4. Lock in the team
In services businesses, the people are the asset, and buyers underwrite the ones who will still be there after closing. Retention agreements or stay bonuses for genuinely key people, employment agreements where they're missing, and clarity about who knows what — all of it is easier and cheaper to arrange 12 months out, when it reads as good management, than during diligence, when it reads as triage. Founders sometimes hesitate to tell anyone a sale is possible; in practice, a small circle of trusted leaders brought in early, with upside tied to a successful transition, tends to become your strongest asset in the process rather than a risk to it.
What Buyers See When You Prepare Your (SDVOSB) Business for Sale Early
Pull the four workstreams together and the payoff is a business that reads well on every instrument a buyer checks: leadership that doesn't depend on the founder, numbers that hold up under scrutiny, contracts with runway ahead of them, a committed team, balanced revenue, and records that are exactly where diligence expects them to be. None of those readings requires perfection — buyers weigh them together — but each one that sits in the strong zone removes a discount and a negotiating lever from the other side of the table. Preparation, done early, is simply the practice of removing reasons to pay you less.
The Runway Belongs to Your Advisors, Too
Two years out is also when the professional team assembles. A government contracts attorney should review your contract files, teaming agreements, and anything touching novation well before a buyer's counsel does. Your CPA builds and defends the earnings bridge, and models the tax picture across structures and closing dates — decisions with real dollars attached that are far more flexible early than late. An M&A advisor who knows your niche brings current buyer intelligence and, closer to launch, runs the process itself. Each of these is a specialist's lane; assembling the team early means every workstream on the runway has an owner, and the founders who prepare their SDVOSB for sale this way consistently reach closing with fewer surprises and stronger terms.
Prepare the Capital Plan on the Same Runway: There's one more workstream that belongs on the 24-month calendar: deciding what the proceeds will do. Knowing your number — what the sale needs to produce for your family's plan to work — clarifies every offer you'll evaluate, from headline price to earnout structure. At Infinitus Wealth Management, we build custom portfolios of individual stocks and bonds, constructed security by security around exactly that plan, as a fee-only independent fiduciary. Starting the conversation during the runway, not after the wire hits, means your capital has a job description the day it arrives.
Frequently Asked Questions
How do you prepare an SDVOSB for sale?
Start roughly 24 months before going to market and work four fronts in parallel: make the business run without you, get financials diligence-ready with documented adjustments, position your contract portfolio for maximum runway, and commit your key people through the transition. Each takes months of visible history to be credible to a buyer.
Why do buyers care about owner independence?
Because they're buying the business, not the founder. When agency relationships, delivery, and pricing all route through one person who is about to leave, the buyer discounts for that risk. When named leaders own those functions — and have for a year or more — the same revenue is worth more.
How long does preparation actually take?
The individual fixes are often quick; the history is what takes time. A delegation that started last quarter is a plan, while one that has run for eighteen months is a fact buyers can verify. That's why the runway is measured in months, not weeks — and why starting two years out is an advantage, not a burden.
Timing Your SDVOSB Sale: Contract Cycles, Option Years, and Market Windows
The SDVOSB Exit: What Happens to Your Set-Aside Status When You Sell Your Business
Selling Your Veteran-Owned Business: Your SDVOSB Status, Your Team, and Your Money
The Veteran Business Owner's Guide to Succession Planning Inside the Family
Independent Fiduciary Advisor vs. Wirehouse Advisor: Which Is Right for You?
Disclosures. Infinitus Wealth Management is a fee-only, independent registered investment adviser. This article is provided for general informational and educational purposes only and does not constitute investment, legal, tax, or accounting advice, nor an offer to buy or sell any security. Nothing herein should be construed as a recommendation regarding the sale of any business or the purchase or sale of any specific security. The sale of a business involves significant legal, tax, and regulatory considerations, including matters specific to government contracts and set-aside program eligibility; readers should consult a qualified government contracts attorney, CPA, and M&A professional regarding their individual circumstances. Charts and figures are illustrative and hypothetical, are not based on any specific company or contract, and are not predictions of future results. Timelines, valuation dynamics, and preparation outcomes described are general observations and vary by transaction. Past performance is not indicative of future results. All investing involves risk, including possible loss of principal. Advisory services are offered only to clients or prospective clients where Infinitus Wealth Management and its representatives are properly licensed or exempt from licensure.
