When a business owner decides that the time has come to consider selling, there are many aspects of the business that will need a closer look- hopefully before the business is listed on the market. An important area to consider during this process is the books.
If you are looking to sell your business, think for a moment about what needs to happen with your finances when a buyer makes an offer. When someone makes an offer on your business, due diligence begins, and during this period a prospective buyer gets a chance to go through all of your financial records. Are your books ready for this process?
If the answer to that is no (if your financial records consist of a QuickBooks account that you’ve never given much thought to, or if they’re nothing more than a bunch of boxes in the back stuffed with paper and receipts) then now is the time to act.
The best way to get your finances in good order is to hire professional help. Ask your business broker to recommend a CPA who has experience and knowledge with preparing a business for sale. The right CPA will be able to assist you with clearing out any “skeletons” and making your records easier to interpret by buyers.
Just like you would clean a house before you let prospective home buyers in, you need to clean up your books, find any issues that arise from a good look through them, and then address and correct these issues. If you deal with any financial issues in advance, then those problems won’t become negotiating points for the other side as you near the closing table.
Your records are the main way you prove that the price you are asking for is a fair one, so having them in a user-friendly form will greatly help during negotiations. Using a qualified CPA will insure that the books are easy to read and your numbers are easy to prove.
Planning ahead also means you can address problems and fix issues without the pressure of a buyer peering over your shoulder. By solving these issues in advance you will be able to present your business in the best light, instead of playing catch-up after the first impression has already been made.
Are you a business owner who has been thinking about selling, but your books are not in the best shape? Please feel free to leave us a comment or question here, and we will be happy to help you get your finances in ready-to-sell order.
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