If I Am Selling, What Kind of Financials Do I Prepare?

Your business certainly has accounting records, or you wouldn’t be seriously considering a sale of your business. It would be almost impossible to sell a business without accounting records. So, if you want to sell but don’t have accounting records, hire a bookkeeper and possibly an accountant and prepare those for the past three fiscal years. Then come back to How To SELL Your Business.

If you have accounting records, that’s a good thing, but you want to “curate” what you show a potential buyer and when. You don’t want to show all the boring details right up front. What you want to assemble are summary income statements for the past three fiscal years, a summary projected income statement for the current year, and summary projected income statements for the three future years. They will, of course, request detailed financial statements as part of their due diligence, but that comes later, once you have signed a letter of intent (“LOI”) with the buyer. Summary income statements include the major categories of revenues and expenses, but not all the subcategories and specific revenues and expenses.

And a current summary balance sheet will likewise only include major categories of assets and liabilities.

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