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All You Need To Know About Choosing A Merger & Acquisition Advisor

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How to Get Your Financial Documents in Order When Selling Your Business

Preparing financial documents is an integral part of selling your business. Learn how you can get your financial documents in order to be ready for the sale.

Selling your business is one of the most thrilling experiences that you can ever go through. This is especially true if you get a mouthwatering deal. Suddenly, mountain biking or bungee jumping in Vanuatu does not give you the same rush that you get when you see that first offer.

The excitement may, however, wane after you realize how complex selling your business will be. There are several considerations that you have to keep in mind if you wish to have a successful deal. You will need to engage the services of many professionals, such as attorneys, advisors, and even accountants.

Your buyer will also need to audit your financial documents before they decide to sign the deal. This means that you will have to prepare the documents months or even years before selling your business. Remember that your profit will depend on a couple of things, including your business operations, the timing of the sale, the reason for sale, and the value of your business.

Financial documents that you will need to sell your business
Buyers need your business’ financial information to determine the offer that they will make. Lacking the required documents or giving raw financial data to potential buyers opens up room for confusion. You will have to prepare finance documents before and after the offer is made. Some common financial documents that you will need to prepare include:

Tax forms
Tax forms are one of the most important things you should have in hand when seeking to sell your business. They are legal documents that can verify the amount of money you made and if you are tax compliant.

No one wants to buy a business that owes thousands of dollars in back taxes. The federal tax returns will also document the sales and profits of the company. Be sure to provide copies of your federal tax forms that date back three years or so.

You should know that a buyer will inherit the assets and liabilities of your company. They also seek to get the branding and earning potential of your organization. This is why you should have a list of assets that detail the property that your business owns, the purchase price of your assets, and information about the sale.

You should also readjust your financial data according to the actual value at the time. If you bought an office complex for $2 million, then you should factor in the appreciation period and get the actual figures.

Financial statements
There are several financial statements that a business should prepare. Some of these are prepared for the proper running of the business, while others are made for compliance with external institutions.

A profit and loss (P&L) statement shows whether your company has been getting revenues and what has contributed to your revenues the most. A balance sheet, on the other hand, will give a clear picture of your finances at a particular time. It will show the assets that you own and the liabilities of your business. You should also prepare a cash flow projection statement that shows the short-term and long-term revenues that you expect.

4 tips to help get your finances in order for a sale
Selling your business can be one complicated task, especially if you do not have any prior experience. While you may be great at running your successful company, selling it will be a different thing. Here are a few tips to help you get your finances in order when preparing to sell.

1. Get a great team
Selling your business will take lots of time. You will have to prepare several documents while still looking for potential clients. This is why you need an understanding and supportive team to push you through the sale.

You should enlist the services of professional advisors as well as accountants to help you prepare your financial documents. Having a great team by your side allows you to focus on your business while the business sale progresses.

2. Plan ahead
It is important that you plan months or even years ahead. This will ensure that the business sale is quick and efficient.

As the business owner, you should ensure that your financial records are well documented. You will also need to ensure that the contracts with all your staff and suppliers are properly spelled out. Remember that planning ahead and having everything properly documented may add value to your business negotiations.

3. Understand the tax obligations
You need to understand the tax obligations that arise when selling your business. The last thing you want is an audit from the taxman just because you forgot to pay taxes after the transaction. Selling your business will likely trigger capital gains taxes. In other instances, you may also have to pay goods and services taxes upon selling your business. You should consult the services of a qualified tax professional to ensure that your business is tax compliant.

4. Prepare for the after-sale too
It is not enough to prepare for the business transaction. You also need to think about the settlement period when the transaction has been completed. Be sure to discuss some of the important things that your buyer should know even after the sale. These may include the lease of your business premises, licenses, intellectual property rights, contracts, and security interests, among other items.

Work with SF&P Advisors for a successful deal
If you are thinking of selling your business, then you need to plan ahead months or maybe even years in the future. Trying to seek potential clients and running your enterprise at the same time will cost you both time and effort. You should seek great partners who will walk with you through this exciting path.

SF&P has helped many business owners get mouthwatering deals when selling their companies. Contact us today for a quick consultation.


All You Need To Know About Choosing A Merger & Acquisition Advisor