Once you understand the value of your business, what other information do you need to gather?
Typically, there are a number of things a potential buyer wants to see and often they cannot be completed or done instantly, thus this needs to be considered many years before the information might be needed. The buyer will want financial information on the company, everything from the internal reports to CPA prepared or audited statements and tax returns.
Many businesses also have a monthly financial reporting package, which includes the key business metrics including terms on key customers, suppliers and competitors, product line information and key employee data.
How long does it take to gather the information a potential buyer is looking for?
As you might imagine, it is typically much easier to assemble this information on an annual basis versus trying to go back in time and recreate it from old financial records, which might not even be on location anymore. For instance, if you have to undertake a financial audit for prior years this typically could take many months to complete and can be much more expensive than doing it annually. While often certain financial records are prepared annually, they should be stored in a safe and logical manner so that they can be quickly and easily accessed.
Having all this information prepared can save you time and money and, while you may not be planning to transition out of the business any time soon, you never know when it’s going to happen. The better prepared you are now, the greater chance you have for success. The bottom line is to have a goal for what you want to do and know what is required to accomplish it, and this will normally necessitate some action and reassessment every year.
Brad Holsworth is a partner and assurance practice group leader at Burr Pilger Mayer. Reach him at (925) 296-1004 or [email protected].