Acquisition Readiness

1. Definition

Acquisition readiness exists when a private company can support its operating story with documentary evidence that survives outside diligence before a counterparty has leverage over timing, terms, or interpretation. The issue is not whether the company is for sale. The issue is whether the company can be evaluated without avoidable uncertainty.

2. Point of Friction

Owners may believe the first good conversation proves strategic value. Buyers may initially agree, then revise price, structure, or risk allocation when evidence changes the story. Advisors may see the change as normal diligence while owners experience it as retrading. The Forum discussion exists because those reactions often come from different standards, not bad faith alone.

3. Party Viewpoints

• Owner viewpoint: the company story, customer base, growth history, and local reputation should carry weight because they reflect real enterprise value.
• Acquirer viewpoint: price and structure depend on what survives diligence, not only what sounded credible in the first meeting.
• CPA or diligence advisor viewpoint: revenue quality, margin durability, add backs, working capital, and customer concentration need source evidence.
• Attorney or lender viewpoint: contracts, obligations, liens, approvals, and financing conditions can change the risk profile even when the business story remains attractive.

4. Working Reference Position

The working position is that companies exposed to acquisition interest should know which claims can be supported before diligence begins. The unresolved issue is how much preparation is prudent for a company that is not actively for sale but may still face buyer attention, succession pressure, or lender scrutiny.

5. Discussion Tests

1. Which claims from the first meeting would change terms if evidence is thin?
2. Which add backs, margin explanations, or customer concentration narratives survive outside review?
3. What does the owner call retrading that the buyer calls risk allocation?
4. Which evidence should exist even if the company is not for sale?

6. Resolution Pathways

• Separate strategic attractiveness from evidence-supported valuation before buyer leverage increases.
• Identify which claims affect price, structure, financing, indemnity, or timing.
• Prepare owner expectations around what diligence is designed to challenge.
• Use Forum discussion to clarify where buyer behavior is rational, opportunistic, or a response to avoidable uncertainty.

7. Open Questions for the Room

• How prepared should a good company be if it is not actively seeking a buyer?
• When is a retrade a fairness problem, and when is it an evidence problem?
• Which diligence gaps are normal, and which signal deeper operating weakness?
• How should owners prepare without turning every readiness conversation into a sale process?

8. Institutional Alignment

Due diligence evidence practice, SEC disclosure control concepts, ACFE fraud risk concepts, quality of earnings review, working capital analysis.

9. Classification and Use

This entry is an internal draft classification maintained by East Texas Capital Forum for educational discussion, professional calibration, and private company readiness review. It is not a public accreditation, legal standard, accounting standard, securities standard, or substitute for professional advice. The entry identifies a recurring professional tension rather than a completed answer.

10. Reference Terms

The terms MUST, SHOULD, and MAY are drafting terms used to separate evidence expectations, recommended practice, and permissible interpretation inside this internal reference system. They support structured discussion only. They do not create legal, accounting, lending, securities, or professional duties.