Sixty Days Before Banker Engagement: The Advisor's Pre-Mandate Checklist
The most leveraged sixty days in a lower-middle-market sale process are not the sixty days after the LOI. They are the sixty days before banker engagement. The work done in that window sets the ceiling on what the auction can defend, because the auction can only sell what the preparation has made sellable.
I have been on enough of these processes from the advisor side to have a strong opinion about what belongs in those sixty days. Here is what the work looks like when it gets done well, and what the work costs the seller when it gets skipped.
The first piece of the pre-mandate window is the buyer-lane decision. The seller and the advisor together identify which buyer archetype is most likely to be at the table given the operating profile, the size of the business, the sector, and the founder's preference on continuity. Strategic, sponsor, and family office buyers underwrite differently. The same business does not compress the same way in all three. Picking the lane before the marketing starts changes how the marketing gets built. Picking the lane after the LOI lands is too late.
The second piece is the working capital diagnostic. The seller's operating finance team produces a thirty-six-month working capital history with seasonal pattern fully visible. The advisor reviews that history against the working capital normalization standard that lenders in the seller's likely buyer lane apply. The gap between the seller's reported working capital and the lender's normalized definition is the working capital compression the seller will absorb at close. Knowing the number sixty days before banker engagement gives the seller two options the seller does not have ninety days later: the seller can either invest in tightening the underlying working capital pattern, or the seller can model the absorption into the value expectation and stop being surprised by it in week three of diligence.
The third piece is the add-back vetting. The seller and the advisor walk through every add-back the seller is likely to memorialize in the marketing book and test each one against a lender-acceptable documentation standard. The add-backs that survive go into the book. The add-backs that do not survive get either rebuilt with better documentation or removed from the model. Rebuilding takes weeks. Removing in week three of diligence costs multiple turns on a sub-fifty-million deal. The vetting is much cheaper sixty days before the marketing book is written.
The fourth piece is the customer cohort story. The advisor builds a customer revenue cohort analysis at three-year, two-year, and one-year retention. The story the cohorts tell becomes the answer to the most predictable diligence question in the lower-middle-market: how durable is the revenue. If the cohorts tell a strong story, the cohort analysis goes in the data room and the diligence question gets answered before it is asked. If the cohorts tell a weak story, the seller has sixty days to either improve the cohorts (rare in that window) or to build the auction strategy around buyers whose underwriting models tolerate the actual cohort profile.
The fifth piece is the management transition story. Buyers in every lane are underwriting the seller's continuity risk. The seller and the advisor identify, on paper, who runs the business if the founder leaves at close, in twelve months, in twenty-four months. The names matter. The compensation structures for those names matter. The retention plan matters. Most sellers skip this until the LMA negotiation forces it. Doing it sixty days before mandate gives the seller a different conversation with the buyer about earn-outs and rollover equity, because the continuity story is already on the page.
The research we published in May 2026 (WP-002, https://dx.doi.org/10.2139/ssrn.6735844) maps the post-LOI compression patterns to the underwriting models of the three principal buyer lanes. The implication for advisors is direct. The five pieces above are the ones the research identifies as having the largest forecastable effect on the size of the post-LOI compression. Advisors who use those five pieces as a pre-mandate checklist see meaningfully cleaner deals.
A final note for advisors reading this with a specific client in mind: the pre-mandate window is the only window in the whole arc of a sale process where the seller has high control and low cost. After the banker engagement letter is signed, the cost of every change goes up. Use the window deliberately.
Ron Smith, Founding Partner, Cordis Group | Editor-in-Chief, Cordis Institute | Publisher, Cordis Foundry | Member, Forbes Business Council and Fast Company Executive Board.