A Request That Sounds Routine
Early in almost every deal, I send a management team a short list of information requests. Nothing dramatic: a customer concentration breakdown, a few years of monthly financials, an org chart. It is the kind of ask that gets sent out a hundred times a week across this industry.
What comes back tells me more than most of what follows.
What I Am Actually Watching For
I am not grading the numbers yet. I am watching the response itself: how fast it comes back, how organized it is, and whether the answer matches what I asked for or something close to it.
A team that gets back to me in two days with clean, labeled files has usually run a tight operation for years, not just for the deal. A team that takes three weeks, sends half of what I asked for, and needs a follow-up call to clarify basic terms is telling me something too. Sometimes it means the finance function is thin. Sometimes it means the data genuinely is not clean and nobody has looked closely at it before. Either way, I have learned something before I have opened a single spreadsheet.
I have sat through hundreds of these exchanges over twenty-five years, on both the advisory side and inside private equity. The pattern holds across industries: aerospace suppliers, waste haulers, industrial services shops. The size of the company does not predict the response. The discipline of the team running it does.
Why This Beats the Multiple, Early On
Every buyer wants to talk about valuation first. I understand the instinct, but a multiple is a conclusion, not a starting point. It comes out of diligence, negotiation, and how much confidence a buyer has in the numbers they are being shown. That confidence starts building, or breaking down, in the first few information requests, long before anyone discusses a number.
I have seen deals with a great story and mediocre response habits stall in diligence for months, because every follow-up question turned into another two-week wait. I have also seen deals with an unremarkable growth story move quickly because the finance team answered every question the same day, and every answer was consistent with the last one. Buyers price certainty. A team that responds well is buying itself a smoother process and, often, a better outcome.
A Habit Worth Building Before You Ever Talk to a Bank
If you run a business and think a sale or a raise might be a few years out, the fix here is not complicated. It does not require hiring anyone or building anything new. It is a habit.
Keep your customer concentration numbers current. Know your monthly gross margin by segment without having to ask someone to pull it together. Have a real org chart, not one from two reorganizations ago. None of this is glamorous work, and none of it shows up on an earnings call. But it is the difference between a data request that takes an afternoon and one that takes a month.
I tell owners the same thing I would tell anyone getting ready for something that matters: the preparation nobody sees is usually what decides how it goes. On the water, a boat that is ready before the trip starts is the one that gets the good result. Deals are not so different. The team that is already organized before a banker ever calls is the one that moves fastest once the calling starts.
What I Do With This Signal
When I see a team respond well early, I lean in. I move faster on my side because I trust what I am seeing. When I see the opposite, I do not walk away, but I adjust my timeline and I dig harder before I bring anything to a buyer or a lender. I would rather find the gaps myself, early, than have a buyer find them later in diligence, when the cost of a surprise is much higher.
It is a small thing to watch for. It is also one of the more reliable ones I have found in twenty-five years of doing this.
