Due Diligence Mistakes of Sellers

“I don’t have monthly financial statements. I don’t have an operations manual! Employee job descriptions… ha! It’s all in my brain.”

If you are trying to sell your business and any of the above statements ring true, you desperately need to seek help. The value of your business may have just dropped dramatically, and you can’t fix this problem in a short period of time. You need to have every bit of the financial picture of your company clearly documented and your accounting files and tax returns need to back up your data. Even if you aren’t trying to hide anything, the buyer might think you are. The risk you are taking is that the buyer walks away or uses this opportunity to reduce their offer.

A good reason to hire Apex is that we will help you through the pre-sale planning. The value of your business depends on this preparation.

Example: We had a potential seller that operated his business out of his checkbook with no monthly financials. There was enough cash flow to justify half a million for his business. However, nobody could touch the deal because there were no solid monthly financial records to show a bank, and prospective buyers couldn’t rely on the outdated tax returns.

Due to health issues, the seller didn’t have the time to fix the problem and had to shut down the business. Don’t let this happen to you. A little preparation goes a long way, and you need to start now if you haven’t already.

In our next blog post, we will be talking about the seller negotiation process, so stay tuned!