What the review is
A founder with a letter of intent in hand has usually been told the hard part is over. It is not. The price is agreed; what the price will actually pay is not.
Between a signed letter of intent and money in an account sit a working capital peg whose methodology has probably not been fixed, a closing balance sheet nobody in the company owns yet, inventory and receivable balances that have never been challenged by someone paid to challenge them, and, in most structures, an earnout whose definitions decide whether a meaningful share of the headline is collectable at all.
Each of those is finance work rather than negotiation. Each is cheaper to solve before a buyer tests it than after. And each is a place where a seller can lose more money than the entire cost of getting it right.
The Close Readiness Review examines all of them, on a fixed scope and a fixed timetable, and produces a written assessment of where the money is exposed and what to do about it.
Who it is for
The review is built for the owner of a private company who is somewhere between receiving an approach and closing a transaction. In practice that is four situations.
- A founder holding a letter of intent that has not yet been signed, where the peg methodology and earnout definitions are still open and negotiable.
- A founder inside exclusivity, where the definitive agreement is being drafted and terms are being settled that will govern the outcome.
- A founder who has signed and is now facing a closing balance sheet, a diligence request list, and a sixty-day post-closing review window.
- A founder who is represented, has an advisor running the process, and wants an independent read on the transaction mechanics from someone who has sat in the finance seat.
Windsor Drake represents founder-led companies with enterprise values of $5 million to $300 million. The review is available inside that range and is most valuable where the business carries inventory, deferred revenue, or contingent consideration.
What gets examined
The scope is fixed and it is narrow on purpose. Six areas account for most of the money that moves after a price is agreed.
1. The working capital peg and its methodology
Whether the peg has been fixed at all, which averaging method it uses, and whether that method fits how the business actually cycles. Where a peg has not yet been set, the review builds the seller-side schedule and the methodology argument to table first. Where one has been proposed, it is tested against the company’s own monthly history. See the working capital adjustment for the mechanics.
2. Inventory, reserves, and receivable support
What the inventory is carried at, what the reserve policy is, when it was last applied, and what has not moved in twelve or eighteen months. On the receivable side, aging by customer, payment history, and whether the reserve will survive a buyer’s post-closing analysis. A system report is not evidence, and this is where that becomes expensive.
3. Accrual completeness
The professional fees not yet billed, the rent escalation nobody applied, the commission true-up running a period behind. Under-accrual is the most common buyer finding and it is almost never deliberate. At a closing date it is a permanent transfer of money, because every accrual the buyer adds reduces delivered working capital dollar for dollar.
4. Revenue cutoff and the evidence behind it
Whether shipping records, carrier confirmations, and delivery receipts exist and are organised for the period around the likely closing date. The purchase agreement clause about historical accounting policies is worth having and does not settle whether a specific shipment left before midnight. Documents do.
5. Earnout and rollover mechanics
The metric and its definition, the measurement period, whether an operating covenant protects the standalone profit and loss, whether acceleration exists, what audit rights the seller holds, and whether the buyer can offset indemnity claims against contingent payments. See earnout structures for why these decide the outcome.
6. Ownership of the closing process
Who inside the company will produce the closing balance sheet, on what timetable, with what support, while also absorbing the closing itself. Every other item on this list depends on the answer, and in most founder-led companies there is no answer until someone asks the question.
What you receive
A written review, delivered to the owner, covering four things.
- A findings schedule. Every exposure identified, with the mechanism by which it costs money and, where the records support a figure, an estimate of the amount at risk.
- A priority list. What to fix before the next document is signed, what to fix before closing, and what can wait. Ordered by money at stake rather than by ease.
- The seller-side working papers. The monthly net working capital schedule on the transaction accounting basis, the deferred revenue waterfall where relevant, and the inventory and receivable support, in a form that can be tabled to a buyer.
- The negotiating positions. The specific terms to ask for, in the order to ask for them, with the fallback on each.
The working papers matter as much as the findings. A seller who tables a documented peg first anchors the number. A seller who waits negotiates against the buyer’s draft, inside exclusivity, with no competing bidder in the room.
How it runs
Thirty days from engagement to delivered review, structured so it does not compete with a live transaction for the same attention.
| Stage | What happens | What is needed from you |
|---|---|---|
| Week one | Scoping call, engagement, document request. Review of the letter of intent or draft agreement. | The deal documents and access to the finance lead |
| Week two | Monthly net working capital build, inventory and receivable analysis, accrual testing. | Twenty-four months of monthly financials and supporting detail |
| Week three | Earnout and structure analysis. Findings drafted. Senior review of the working papers. | Availability for questions |
| Week four | Review delivered and walked through with the owner. Negotiating positions set. | Ninety minutes |
Where a transaction is moving faster than thirty days, the scope is compressed to the items still open and the timetable is set in the scoping call.
Who does the work
The review is delivered by Windsor Drake and reviewed by Michael Culhane, a Senior Advisor to the firm and a chief financial officer since 2009 in publicly traded, private-equity-backed and family-owned companies. He has been chief financial officer of Hudson’s Bay Company and of Uline, and carried an initial public offering, a multi-billion-dollar acquisition, and a national divestiture and wind-down from signature through to completion.
The reason a chief financial officer reviews this work rather than a banker is that the questions are finance questions. Whether an inventory reserve will survive a buyer’s analyst is not a negotiating judgment. It is a judgment made by someone who has defended one.
What the review is not
Being clear about the boundary is part of the product.
It is not a quality of earnings report. A quality of earnings engagement rebuilds and normalises historical earnings to establish what the business earns. The Close Readiness Review takes the transaction in front of you and examines whether its mechanics will deliver the price it appears to offer. Those are different questions, and a seller may well need both.
It is not legal advice, and it does not replace transaction counsel. The review identifies where contractual definitions create financial exposure and states the position to take. Drafting the language is counsel’s work.
It is not tax advice. Where structure creates a tax question, the review flags it for the founder’s tax adviser rather than answering it.
It is not a valuation, and it does not opine on whether the price is fair. It examines what that price will pay.
Scope, fee, and how to start
The fee is fixed before any work begins and is set in a short scoping call, because the work depends on the size of the transaction, the structure in front of you, and the state of the company’s records. Windsor Drake does not quote this engagement without understanding those three things.
Where a review leads to a Windsor Drake engagement, whether a full sell-side mandate or a narrower piece of work, the review fee is credited in full against that engagement.
Inquiries are handled discreetly, and the firm will say so if a review is not the right answer. Request a conversation.
Questions founders ask
What is a close readiness review?
A close readiness review is a bounded examination of the finance work that determines what a signed transaction actually pays the seller. It covers the working capital peg and its methodology, the evidence supporting inventory and receivable balances, accrual completeness, revenue cutoff, earnout definitions and control rights, and ownership of the closing balance sheet. It is not a quality of earnings report and it is not legal advice.
When in the process should a founder run one?
The highest-value moment is between receiving a letter of intent and granting exclusivity, because the terms that decide the outcome are still open. The second-best moment is during exclusivity, before the definitive agreement is settled. It remains useful after signing, when the work shifts from negotiating terms to defending the closing balance sheet against them.
Is this the same as a quality of earnings report?
No. A quality of earnings report rebuilds and normalises historical earnings to establish what the business earns. A close readiness review takes the deal in front of you and examines whether its mechanics will deliver the price it appears to offer. The two answer different questions and a seller may need both.
Do I need to change advisors to run one?
No. The review is a standalone engagement and many founders run it while represented by another advisor or working directly with a buyer. It is deliberately scoped so it does not require displacing anyone already on the file.
What does the Close Readiness Review cost?
The fee is fixed before work begins and is set in a short scoping call, because the work depends on transaction size, the structure in front of you, and the state of the company’s records. Where a review leads to a Windsor Drake engagement, the fee is credited in full against that engagement.
Published August 27, 2026 by Windsor Drake. Reviewed for transaction finance by Michael Culhane, Senior Advisor. Nothing on this page is legal, tax, or investment advice, an offer, a solicitation, or a representation as to the outcome of any transaction.