The Situation
A SaaS business in the healthcare sector called me because they knew their financials were not exit-ready. They had been operating for over ten years. The business had two products, three legal entities, an internal finance team, and recurring revenue that had compounded quietly for a decade.
What they did not have was a gross profit line.
Not because the business was unprofitable. Because nobody had ever built one. Revenue and other income were clumped together in a single block. Costs were a laundry list with no department structure. Payroll, the largest cost in the business, was a lump sum. And because nobody had ever consolidated the three entities, the group's financial position was a mystery.
The founders had been running a real business for ten years without ever seeing a real set of financials. They knew something was wrong. They did not know how much.
What It Actually Cost Them
The cleanup took three months before we could even begin to think about a financial model.
Three months of reconstructing a decade of financial history. Rebuilding the chart of accounts. Reclassifying costs across departments. Constructing gross profit for the first time. Eliminating intercompany transactions that had accumulated for years without underlying legal agreements. Consolidating three entities into a single group view.
That is three months of delay on a sale process. Three months of adviser fees. Three months where the founders could not answer basic questions a buyer would ask in the first meeting.
When the clean numbers finally emerged, the business looked solid. Gross margins were excellent. Cash flows were strong. But there was a problem the founders had not seen coming: profitability had deteriorated over the prior six months. Growth had slowed, and costs were quietly eroding EBITDA. A trend that would have surfaced in diligence at the worst possible moment, when leverage sits entirely with the buyer.
Because we found it first, the founders could address it before going to market rather than explaining it under pressure.
The Model
Once the historicals were clean, we built the financial model the sale process required. Three years of reconstructed history. Two-year forward forecast. Included were an MRR waterfall, cohort breakdown, revenue waterfall, pricing tier drivers, and deferred revenue schedules. The business was also mid-migration on its pricing structure, which meant modelling two parallel revenue streams while presenting a coherent forward picture to buyers.
The model exists now. The sale process can finally start!
The Real Lesson
This business did not fail to build its finance function because the founders were careless. They built a real product, grew a solid customer base, and expanded for a decade. Finance just never kept pace.
The cost of that gap does not show up on the P&L. It shows up when you decide to sell and discover that three months of work stand between you and being able to kick off the exit.
The founders who avoid that cost are not the ones who hire a full-time CFO in year one. They are the ones who get the right expertise at the right moment.
If any of this sounds familiar, send me a message. The earlier the conversation, the more options you have.