If you are considering selling your business, whether now or in the near future, the part of your business that will be instrumental in the success of your sale will be your financial records.
Every buyer who considers your business will probably see your financial information long before they ever see the inside of your location. Your books will speak for your business, so they need to make that critical first impression.
You will need to have the financial core of your business ready for buyers in a concise and ready to read format. Make sure everything is legible. A copy of your tax return that has been recopied so many times you can barely read it is not going to work.
Another major issue we come across is owners who have a huge box of unorganized and miscellaneous pieces of paper. These sellers want buyers to somehow divine the bottom line of their business from that collection of information. It’s not going to happen.
If you are someone who doesn’t have the know-how or time to turn that box into something usable, ask your business broker for help. They will know professionals who can make heads or tails of your numbers in a way that will really speak to potential buyers.
What information do I need to have ready?
You will need:
- Your past three years of tax returns.
- Profit and Loss statements (P&L’s) for the past few years
- An up-to-date balance sheet
- Any contracts, like client contracts or vendor contracts
- A copy of your lease
- Relevant documentation that shows revenue or costs
- Employee contracts
- Insurance information
- Documentation that shows cash flow
Once you have this information assembled and put together in a way that will make sense to buyers, you will be well on your way to a successful sale.
Are you a business owner who has a giant box of financials you’d rather not deal with? Do you have questions about your current financials and whether or not they are buyer-friendly? Please feel free to leave us a comment or question here, and we will be happy to assist you with creating great-looking financials.