Preparing Financial Records and Statements: Strategies for Success

Preparing Financial Records and Statements: Strategies for Success

Financial statements that provide accurate and clear information are crucial for buyers to assess the profitability of your business, and its overall financial health. From balance sheets to tax records, your financial records can make or break a sale, so it's imperative to have them in order, even before you put your business on the market.

To pave the way for a smooth sale, streamline the due diligence process, and mitigate the risk of the deal collapsing, there are a few things you can do to prepare.

Be Proactive in Identifying and Addressing Issues

Preparing your financial records at least 6 months before you plan to sell your business will give you enough time to locate all the necessary documents you need. It also gives you time to make sure your financial statements truly reflect the health of your business.

The worst time for an error to be flagged is when a potential buyer is carrying out due diligence, so don't be caught off-guard. Be proactive and resolve these issues ahead of time, a buyer identifying these issues may create distrust and uncertainty, which could result in the terms of the deal being renegotiated or the deal being terminated all together.
Using consistent, reliable, and accurate accounting methods is also crucial. Long-term evidence of consistent and accurate financial statements and record-keeping is more appealing to buyers, so ensure that you are using reliable accounting software and that you're following GAAP (Generally Accepted Accounting Principles).

Familiarise Yourself with What Records Buyers Will Want to See

Balance Sheets: A balance sheet displays the accounts and ledgers at a specific point in time, making it a useful financial document to compare the health of your business at different periods. Comparing balance sheets for the last five years illustrates the growth of the business and its overall financial health. When analysing your balance sheet, buyers will be trying to determine whether your business has stable asset levels and inventories, solid cash flow, and as little debt as possible.

Profit & Loss Statement for the last five years: This statement will of course vary for each business, as the line items are different for each. However, every profit & loss statement should include revenue growth of the last 5 years, EBITDA margins, operating expenses, production costs, and interest expenses.

5-Year Forecast: This is the really exciting part for both you and the buyer. For you, it's a chance to show off the potential of your business based on its current trajectory, and for the buyer it allows them to envision the future of their potential investment. The numbers should illustrate your predicted valuation in the next 5 years, and since they will be highly scrutinised by buyers, it's crucial that they are realistic.

Preparing Financial Records and Statements: Strategies for Success

Turn to Experts

A professional accountant can not only assist you in preparing these financial documents and ensure they reflect the true financial condition of your business, but they can also help make the deal process more efficient, and help you create a strong, comprehensive 5-year plan for potential buyers.

Furthermore, an outsourced Finance Director can help you realise your business goals and maximise the value of your business before you put your succession plan in motion. An outsourced Finance Director will use their expertise and knowledge to advise you and strategise on the best course of action for maximising your business' value.

GS Verde Group is a multidiscipline team of experts specialising in law, finance, tax, and communications who can help you showcase the full growth potential of your business by determining the best succession plan for your business, structuring an effective exit strategy, providing financial forecasts, and conducting reverse due diligence.

For more information, visit our Sell a Business page, or our Employee Ownership or Private Equity pages to learn more about other types of business sale.

Contact GS Verde's multidiscipline team to learn more about what you need to achieve a successful business sale from end to end.

Back to News Contact Us


"GS Verde Tax & Accountants have been invaluable during an important and rapid growth phase of our business."

Nick & Jon Bird, Partners, SquareBird

"There are lots of accountancy firms that we could have chosen from to work with however there was a distinct difference in the approach and service level that was offered by GS Verde Tax & Accountants."

Kevin Dunn, Director, UKMD Ltd

"They are our finance team; and they are on top of our accounts and our financial strategy. We rely on their expertise to help us drive our business forward and they meet every aspect of our needs"

Mike Stephens, Director, English County Contracts Ltd

"We know that we cannot get a better or more reliable service – we don’t even have to think about it. GS Verde Tax & Accountants go beyond the call of duty"

Jonathan Gould, Managing Director, GWorks Ltd

"Worth absolutely every single penny – this is the single best decision we have made in the last year. For every single person we have spoken to at GS Verde Tax & Accountants – nothing is too much."

Hannah Kennard, Director, AK Plant Services Limited

"I feel valued as a client. I get rapid responses to any emails or calls; and I must say the GS Verde Tax & Accountants team are brilliant. I already feel freer to concentrate on setting the strategic direction for the business"

Mark Burland, Director, First Class Comms Ltd t/a FCC