May 27, 2025
Taj Adhav
How to Prepare for Private Equity Due Diligence
What private equity firms expect from lease data and how to prepare accurate, investor-ready information.
How better prep, cleaner data, and fewer surprises lead to better outcomes with private equity
In 2024 & 2025, we saw private equity replacing IPOs as the go-to growth path for franchisors and multi-unit operators. And while the potential rewards are massive—capital for expansion, support for acquisitions, and a clean succession plan—the stakes are just as high. Because when it comes to selling part or all of your business, what you don’t know—or haven’t documented—can absolutely kill your deal.
Whether you’re a founder considering an exit or a franchise brand looking to scale with investment support, one truth rings clear: success depends on how prepared you are before the money hits the table.
The New Route to Growth
Years ago, entrepreneurs built companies to go public. That’s no longer the norm. Today, more brands are building to sell into private equity—and that shift has raised the bar on preparation. PE buyers don’t just want potential. They want proof.
They want to see sustainable cash flow, scalable systems, and real upside. And they want it fast. If your team can’t provide detailed financials, clean lease records, and a clear understanding of your operating model within a few clicks, you’re already at a disadvantage.
Surprises Kill Deals
Here’s a hard truth: deals fall apart over surprises. Not just big ones—little ones too. Unaligned lease and franchise agreement dates. Missing permits. Vague or incomplete financials. Or even simple things like unclear tax obligations. These aren’t unusual—but they’re unacceptable in a deal environment.
Private equity firms expect precision. If you’re scrambling to find basic information—or if red flags emerge during diligence—the buyer starts recalculating risk. That means lower multiples, longer timelines, or worst of all, walking away entirely.
Being prepared doesn’t just help you close—it protects your valuation.
Why “Being Ready” is a Competitive Advantage
Most sellers think they’re ready long before they actually are. A quality of earnings (QoE) report is often the first wake-up call. Unlike an audit, which just reports what happened, a QoE helps buyers understand how the business will perform going forward. It strips out one-time expenses, layers in revenue from signed-but-not-opened units, and normalizes earnings to reflect future performance.
But here’s the catch: if you wait until you’re in a transaction to conduct your first QoE, it’s already too late to course-correct. Smart operators start this process two to three years ahead of a deal. Not only does it improve internal visibility—it gives you time to fix what’s broken, improve EBITDA, and strengthen your story.
It’s More Than Financials—It’s Fit
Money matters, but it’s not everything. Culture fit, leadership alignment, and long-term strategy play just as big a role in whether a deal succeeds. You’re not just selling numbers. You’re selling your team, your vision, and your future plans.
The best deals aren’t rushed. They’re built on shared values and a clear plan to fuel the next chapter of growth. If you can’t articulate what you’ll do with the capital—or how you’ll manage the expansion—you’re leaving money on the table.
Clean Data = Faster Deals
Here’s where modern platforms like Leasecake can make or break your process. When your leases, contracts, royalty schedules, and location details are centralized and easily reportable, you don’t just look prepared—you are prepared.
Buyers and lenders alike move faster when your data room is clean, your documents are mapped, and your obligations are clear. From refurb requirements and CAM escalations to lease expirations and franchise agreement terms—every detail matters. The less friction, the faster the close.
Getting Ready Starts Now
If private equity is on your radar—even as a five-year goal—start preparing today. Organize your documents. Conduct an internal QoE. Clean up your lease records. Talk to experts who understand franchising and growth-stage transactions.
Because the truth is, your future buyer already knows what they’re looking for. The only question is whether you’ll be ready when they knock.
The 7 Deal Killers That Can Derail Your Transaction
What PE buyers look for:
Deal Killer | Why It Happens | Impact on Your Deal | How to Prevent It |
1. Surprises in Due Diligence | Scattered lease docs, expired franchise agreements, untracked obligations | PE team loses confidence and questions valuation | Build a clean, centralized data room with real-time alerts and supporting documents in Leasecake |
2. Relying on Audits Alone | Assumes GAAP audit is enough; no adjusted EBITDA view | Inaccurate valuation; missed opportunities to increase earnings | Conduct a sell-side Quality of Earnings (QoE) report 12–24 months before the deal |
3. Incomplete Lease & Location Data | Poor tracking of terms, CAM, co-tenancy, capex, and renewals | Buyer sees real estate as a risk, not an asset | Use Leasecake to track lease terms, obligations, and alignment with franchise agreements |
4. No Clear Use-of-Funds or Growth Plan | No strategic plan for capital deployment | Buyers assume post-close chaos or poor ROI | Create a 3–5 year plan for expansion, including use-of-funds modeling |
5. Cultural Mismatch with the Buyer | No evaluation of buyer’s philosophy or operational style | Employee turnover, franchisee unrest, or deal collapse | Vet PE partners like you would a leadership hire—values, expectations, and vision alignment matter |
6. Tax & Legal Structure Oversights | No planning for entity structure, pass-through taxation, or IP treatment | Millions lost due to poor tax handling; legal delays | Engage experienced tax and legal advisors early to optimize transaction structure |
7. Preparing Too Late | Waiting until LOI to get organized | Rushed process, lower valuation, broken deals | Start 2–3 years ahead with tools like Leasecake to stay ready year-round |
What ‘Ready’ Looks Like with Leasecake
Every lease, agreement, and document in one place
Proactive alerts for franchise expirations, lease renewals, and brand refresh cycles
Reports that help you answer investor questions instantly
AI-powered lease abstraction and risk analysis (Leasecake LIFT™)
Compliance, transparency, and clarity before a buyer even asks
Want to Get Deal-Ready Without the Last-Minute Scramble?
Leasecake is the platform built for multi-unit brands preparing for growth, investment, or exit.
We help franchisors and operators stay ahead of real estate risk, align franchise and lease terms, and build investor-ready data rooms—without relying on spreadsheets or scattered folders.
Centralize lease, contract, and location data
Track obligations, renewals, and financial impact
Surface hidden risks with AI-powered insights (Leasecake LIFT™)
Export clean reports for investors, bankers, or buyers
Whether you’re 6 months or 3 years out from a deal, the time to prepare is now.
Disclaimer:
The information in this blog post is intended for general informational purposes only and does not constitute legal, tax, or financial advice. Every business situation is unique, and decisions related to private equity transactions, tax structure, or franchise operations should be made in consultation with qualified legal, tax, and financial professionals.
Taj Adhav
Taj Adhav is the Founder of Leasecake, an award-winning real estate and location management platform “made easy”, built to reduce risk and protect the locations for multi-location tenants. As a curious kid, he always asked questions and recognized the opportunity to transform the market after seeing enterprises unsuccessfully managing the risks of leasing real estate. Multi-location tenants and franchisors needed a way to protect their locations, make faster and smarter decisions, and keep track of business-critical events to ensure their long-term success.
