The internal buyer needs more institutional readiness than the external buyer does.
Succession transactions surface the same institutional-readiness diligence an external acquirer would apply — often with less negotiating slack, because the internal buyer typically relies on third-party financing (ESOP trustee, bank, mezz lender, intra-family note underwriter) that reads to the same standard a strategic acquirer would. The bank funding the deal will not extend you the courtesy of a long timeline.
Four common succession transactions. The same institutional verdict on every one.
Succession is described in family-business language. It is financed in institutional language. The financing party — not the family conversation — sets the diligence floor.
- ESOP — Employee Stock Ownership Plan. The trustee carries an ERISA fiduciary duty to the participants and cannot pay more than fair market value; the financing lender prices the loan against the same DSCR, leverage, and coverage covenants any acquisition lender would apply. Both reviewers read your business through an institutional lens before the transaction closes.
- MBO — Management Buyout. Almost always funded by mezzanine or unitranche debt with a thin sliver of management equity. The lender’s credit committee reads the same artifact a buy-side IC would. Management’s familiarity with the business is not a substitute for the underwriting — the committee still wants the institutional verdict.
- Family-to-family transfer. Often structured through an intra-family note, an intentionally defective grantor trust, or a gift-and-sale combination. The IRS scrutinizes the valuation against fair market value; estate counsel needs the same kind of documentation a buyer-side QoE would build to defend the transfer price under audit.
- Key-employee buyout with a seller note. The seller-note holder is now in the position of a junior lender behind the senior debt. You are underwriting your own buyer. The institutional-readiness verdict is the document that tells you what you are underwriting — before the note papers are signed and the lien position is locked.
The internal buyer’s relationship with the seller does not lower the diligence standard. It raises it — because the financing party knows the relationship will pull toward leniency, and prices that into the underwriting.
Same engine. Same ladder. Same fingerprint. Succession vocabulary.
The Self-Assessment, the Gap Review, and the IRA are the same artifacts a buyer-side reviewer would credit. You are running them privately, before the trustee or the lender or the IRS does.
- Step 01$750
Self-Assessment
See the readiness verdict before the trustee, lender, or IRS sees it.
Operator-attested intake, graded against the 10-axis institutional readiness framework. 4-page fingerprinted memo. Privately, on your own timeline — years before you sign anything binding. The $750 credits forward to the Gap Review within 90 days.
- Step 02$4,500
Readiness Gap Review
The top 5 institutional blockers the ESOP / MBO / family-transfer diligence will surface.
Document-verified, limited scope. Five business days from upload to memo. Names the five blockers the trustee's underwriter, the lender's credit committee, or the IRS-facing valuation work will hit first, plus the evidence each one requires to clear. Credits forward to the full IRA within 60 days.
- Step 03$12,500
Institutional Readiness Assessment
The artifact the trustee, lender, estate counsel, or IRS appraiser can independently verify.
Full 10-axis institutional readiness assessment. Internal version is operator-confidential. External version carries a deterministic fingerprint and a public verification URL — the kind of portable document an institutional reviewer credits independently, without re-running the underwriting from scratch.
- Step 04Re-IRA delta
Prove what changed before the diligence window opens.
Outcome language, not score language.
Re-run after the remediation work lands. The delta artifact reports which blockers were eliminated, which gates remain, what diligence friction disappeared, and what new financing classes are now viable. Never says 'your score went up' — says what the trustee or lender will no longer have to push back on.
What we will not do in a succession transaction.
Succession transactions sit at the intersection of several professional engagements. Capital Refinery sells productized software for institutional-readiness measurement — one layer of that intersection. The refusals below are the boundary, named in advance, so the artifact stays defensible to every other professional in the room.
- We do not value your business. ESOPs require an ERISA-qualified independent appraiser; family transfers require a fair-market-value appraisal defensible to the IRS; corporate-stock transactions often require a 409A. Those are separate engagements with credentialed professionals — the IRA does not name a price, a multiple, or a valuation range.
- We do not provide tax, accounting, or legal advice. Succession structures (intra-family notes, IDGTs, gift-and-sale, ESOP financing tiers, MBO debt stacks) have material tax consequences. Your CPA, ERISA counsel, or estate attorney designs the structure — we measure the institutional readiness of the underlying business.
- We do not broker the transaction. Succession is internal by definition. If you need third-party financing intermediation (mezz placement, ESOP financing syndication, refinancing), that is an investment banker or the lender directly.
- We do not market to your team, your family, or your trustee behind your back. Tenant data is isolated; we do not aggregate or publish operator information.
Four owner profiles where the institutional-readiness verdict changes the succession plan.
If you recognize yourself in one of these, the $750 Self-Assessment is the lowest-friction way to see what the financing party will see. Privately, on your own timeline.
Owner planning a 3–5 year ESOP transition.
Before the trustee runs the underwriting.
The Self-Assessment gives you a private read on what the trustee's financing underwriter will hit you with — three years before you sign anything binding. The ERISA-qualified appraiser will value the business; the IRA tells you whether the institutional state of the business will support the financing structure the trustee needs to approve.
Owner preparing an MBO with key management.
Before the lender's credit committee reads it.
The management team needs to know what the mezz or unitranche lender's credit committee will price — same artifact, same axes, same standard a buy-side IC would apply. Running the IRA before the financing conversation tells management what they are about to be underwritten on.
Multi-generational owner transferring to the next generation.
Before the IRS reviews the transfer.
The IRA documents the institutional state of the business in a way that supports the valuation work the family's CPA, estate counsel, and qualified appraiser are doing. It is not a substitute for the appraisal — it is the record of operational readiness the appraisal sits on top of when the transfer is examined.
Owner running a key-employee buyout with a seller note.
Before you become the lender.
You are now the junior lender on your own business. The IRA tells you what you are underwriting before the note papers are signed and the lien position is locked. The verdict on the business does not change because the buyer is someone you know — it changes the rate, the covenant package, and the protections you should be asking for.
The internal buyer reads to the same standard the external buyer would. See it privately, first.
The $750 Self-Assessment is the lowest-friction entry to the institutional readiness ladder. The memo is fingerprinted, forwardable, and graded against the framework the trustee, the lender, the estate counsel, or the IRS appraiser will apply when the succession transaction lands in their queue.