In the October issue of EL&F Magazine, four industry experts provided their insights into merger and acquisition opportunities in the feature, “2026 M&A Outlook Looing Up for Equipment Finance.” As a follow up, we asked our experts what advice they can offer equipment finance companies that might be thinking about selling their companies. It’s never too early to look ahead, they agree, with steps company executives can take steps to put themselves in the best position when the time comes.

Grow – thoughtfully   

Companies must show stable growth in originations and profitability, and take a disciplined approach to growing the business, says Jim Jackson, Co-CEO and leader of the Merger & Acquisition Advisory Practice at The Alta Group. Brent Ferrin, Managing Director at Houlihan Lokey, adds that prudent growth – versus growing at all costs – is often the best strategy. He also stresses the importance of maintaining a low-loss profile and driving profitability.

“An important trend in M&A transactions is for the selling company to hire an accounting advisor that proactively conducts a quality of earnings (QofE) review.” 

—Jim Chester, Keefe, Bruyette & Woods

Since growth often requires investments in salespeople, marketing and/or front-end systems – all of which can take time to bear fruit – it’s important to consider the timing of these investments in the context of the eventual sale, adds Chris Hemler, Managing Director at Hovde Group. “You would ideally be striking a balance between size, growth and profitability at the time of sale,” he explains. “But if you need to lean one direction, profitability will have the largest impact on valuation in today’s market.”

Implement policies, procedures and processes

Companies need to make sure they have solid audited financials, tight reporting and a timely month-end closing process, says Ferrin. “Establishing proper policies and procedures, and producing solid management reports, are key to efficiently monitoring and presenting the business.”

Jackson adds that a company preparing to sell must apply conservative credit, accounting, pricing and residual setting policies and procedures; prepare detailed annual budgets; and understand variances to actual results. He emphasizes the importance of audited financial statements and maintaining a seasoned, highly qualified management team.

“A company needs to tell its story well and know where it fits in the market.” 

—Brent Ferrin, Houlihan Lokey

In fact, an audit alone is not enough, says Jim Chester, Managing Director of Investment Banking at Keefe, Bruyette & Woods. “An important trend in M&A transactions is for the selling company to hire an accounting advisor that proactively conducts a quality of earnings (QofE) review,” he explains, adding that the advisor is typically independent of the company’s current auditor. “The QofE provides an independent review of the company’s financial accounting policies and practices, and supports the company’s preparation for the intensive financial due diligence of a buyer.”

Chester likens the preparation to that of preparing to sell a home. “When you’re looking to put your house on the market, you make needed repairs, make sure maintenance is up to date and try to present the house as positively as possible,” he explains. “When it comes to accounting practices, a company wants to validate that its accounting practices, methodologies and judgments can be supported by an independent accounting advisor – and that, ideally, there are no surprises.” If the QofE firm identifies key issues, he says, the company can implement necessary changes in advance of the sale process.

Find your niche and know how to communicate it

Differentiating a business is a critical step in getting it ready to sell. The experts all agree that it’s important to put in the work to determine a company’s points of differentiation and fully understand its value proposition. “That differentiation could be partnerships on the front end, proprietary technology, a servicing advantage or other,” Ferrin says. “A company needs to tell its story well and know where it fits in the market.”

“Think about the story of your business and what makes it unique,” says Hemler. “Then an investment banker can help hone that story so it resonates most effectively with buyers.”

“It pays – literally – to prepare.” 

—Chris Hemler, Hovde Group

Plan ahead

The experts wholeheartedly recommend planning long ahead of any anticipated sale. “It pays – literally – to prepare,” says Hemler. “Develop consistency in operations, and bring professionalism to the preparation,” says Jackson.

Chester advises companies, if at all possible, to seek out skilled advisors to help in all aspects of sale preparation well in advance of beginning a sale process. That team should include an investment banker (acting as the deal quarterback), a tax advisor, a wealth manager and/or personal financial advisor, and seasoned corporate M&A counsel who is highly experienced and knowledgeable in the industry.

“I always tell clients to operate their company every day as if it were for sale.” 

—Jim Jackson, The Alta Group

Talking with an investment banker and other advisors can also shed light on a company’s current valuation in the current market, as well as the valuation drivers for different types of buyers. “In some situations,” says Hemler, “a company may be surprised to find it does not need to wait to reach a specific financial target, or wait for a change in the overall market, to achieve its goals.”

Be ready…every day

Companies sometimes decide that it is time to sell only to find out that they are not adequately prepared to sell, says Jackson. “I always tell clients to operate their company every day as if it were for sale,” he states. “That way, when the M&A market for sellers is favorable, they can take advantage of the timing.”