Why Selling Your Business Without Accurate, Timely Financial Statements is a Losing Proposition.

You must have accurate timely financial statements to sell you business.

Why Selling Your Business Without Accurate, Timely Financial Statements is a Losing Proposition.

Your financials tell the story of your business. Make it a good one.

Trying to sell your business without accurate, timely financial statements is like jumping out of an airplane with no parachute. You may land where you want to go, but you’ll probably not like the results.

Be ready when an opportunity arises. Once you’ve decided to sell, it’s important to promptly prepare your business for sale and partner with an accounting expert to ensure financial data is properly organized. If you wait to prepare, you may not get the value you deserve. Understanding the financials by engaging with an accounting professional is critical to accurately answering the potential buyer’s questions.

When prospective buyers evaluate your business, they want to understand precisely how well it functions. Essential pieces of information a buyer will likely insist on seeing are:

  • Profitability
  • Pace of Sales/Growth History
  • Margins
  • Cash Flow
  • Customer Diversity
  • Recurring Revenue
  • Well-documented and efficient processes and systems

Having an accounting professional prepare reports to show these metrics and speak to questions the buyer has will instill confidence and ensure the numbers are interpreted correctly. Answering a question incorrectly to a potential buyer could eliminate the opportunity and end the process prematurely.

But what is the first thing a buyer will ask for?

Two to three years of financial records, tax returns, current financial statements, and the last fiscal year-end statement.


Organize your financial documents.

How organized are the business’s financial records? Are they broken down in an easy-to-understand format that can show the financial data in a variety of ways, including month-to-month, customer profitability, product or service line, and job profitability? However you choose to organize your financial records, a buyer will inevitably want immediate access to detailed information about your financial history and health.

Every business owner should understand the income statement, balance sheet, and cash flow statement. All of these provide insight into how well your business is functioning day-to-day. The financial health of your business is likely already top of mind. Still, you must create accurate and detailed financial statements to ensure you understand exactly how well your company is doing.

If everything about your financials is organized, including a solid month-end process that reconciles every balance sheet, you’ve essentially audited yourself. And the value of your business probably just went up.


Exactly which documents will you need to produce?

  • Last three years of completed federal tax returns on the business.
  • Year-to-date (within 60 days) P&L and Balance Sheet
  • Confidential Information Memorandum, if available (Offering memo, executive summary, etc.)
  • Any information on annual capital expenditures
  • List of top 10 clients by revenue (or any customer that represents a concentration that is more than 20% of total annual revenue)


Build a team to help sell your business. Right now.

Many business owners are great salespeople, marketers, or product innovators. But they may not be the best financial brains. Hiring the right people to help with your accounting makes a world of sense. In fact, if you know you’re not the best numbers person in the organization, removing yourself from the day-to-day financial operations could be your best move. Having the best people in place — whether on staff or from a reliable outsource company — is what you need to ensure that your financials are in order.

Select your team three to five years before you attempt to sell:

  • Controller/CFO/Fractional CFO – Ensures accurate financial reporting.
  • CPA – Files taxes and keeps you in Federal and State compliance.
  • Business Coach – Provides motivation plus strategies to help businesses grow.
  • M&A Attorney – Help you understand the legal ramifications of selling your business.
  • Financial Planner – Makes sure you know how to handle your money best.
  • Business Broker – Gives you the best chance of getting the best deal.


Your financials tell the essential story of your business.

A firm financial foundation allows you to make the best decisions for your business. It also gives you the best chance to sell your business for the price you want.

Your buyer needs to understand the story your business is telling. That story is told in various ways, but your financials are the most important to your buyer. An accounting professional familiar with your financial statements is best equipped to provide the information a buyer is looking for. Sharing inaccurate data or information could cost you a favorable offer for your business.

No buyer will agree to purchase a business that appears to be a financial train wreck. That’s why you need solid internal controls and accurate, timely financial reporting. To a smart buyer, it’s fundamental.

Strong revenue and sales figures can mask many sins but can’t conceal them forever. Your buyer will want to fully understand EBITDA (earnings before interest, taxes, depreciation, and amortization). To ensure your financials are in order, bring on the best people to help you make that happen.



This article was written by Heide Olson:

Inspired by her love of small business and drive to serve, Heide has spent the last 19 years building an unrivaled method to take her clients from financial chaos to business clarity and beyond. Partnering with their clients to provide accounting leadership and layering in financial expertise, the All In One Accounting team delivers expert financial oversight that helps drive growth and protect assets. More importantly, peace of mind lets every business owner focus on building, growing, and living in their genius. To fully support the unique needs of their nonprofit clients, the new brand, Veracity Pros, was launched in 2023, exclusively dedicated to serving nonprofit organizations nationwide.

As founder and CEO of All In One Accounting, Inc. and Veracity Pros, Heide has mastered the art of financial connections. Her passionate pursuit of long-term relationships drives the customized, hands-on implementation planning she is known for, and clients rely on. Every mission partner gets the highest level of service from a trusted adviser who knows precisely what it takes to give any company or nonprofit the financial lift they need.

Heide lives in Minnesota with her husband and three children. Their oldest daughter lives nearby with her husband and their two sons.