Paying Close Attention to the Financial Details

Mergers and acquisitions are delicate, detailed, and (at times) daunting. Here at Stage Left Partners Ltd., we’ve learned many essential lessons about the intricacies of the process which we are keen to share.

In this series of lessons learned, we address key learnings in the areas of timing, people, finance, legal and customers to provide a sense of how to prepare and what to expect if you are considering selling your company.

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Lesson #3 – Financial Details

We have shared the importance of timing and people in our previous lessons in this series. Now, it’s time to discuss another crucial element in our lessons learned: finances.

Pay Close Attention

The big headline here is to pay close attention to financial details!

Selling a company isn’t an everyday event for most business owners, and the demands of a possible transaction can have a dramatic effect on day-to-day operations. Remember that you need to continue running the business during the due diligence process. It can be challenging if you are not prepared for the work involved, but you do not have to do it alone.

A CPA is Key

Bring your CPA (Certified Professional Accountant) in early. Your accountant knows your business and precisely what an acquiring company will be interested in. They can help you do your homework before entering the process, so you’re prepared when the request list comes in.

Their role is to ensure that your books are in good shape and that you can clearly articulate the financial position of the company. Having a very clear picture of your revenue by product and customer type, your expenses and profit margins with a complete history will build confidence for the buyer.

Tax Implications

In addition, your CPA can advise you on tax implications and how to best manage and minimize taxes that will be triggered by a sale. If there are items that have been neglected in your finances, get them cleaned up before you go to buyers. It is easier to deal with things that you are actively addressing than to have a buyer spooked if they find something that you did not disclose.
You may need to bring in some extra resources to get your finances up to date quickly. We have helped owners engage specialists who were able to efficiently clean things up and prepare for a sale in short order.

You’ve built a strong team for a reason. Now is the time to draw on their wisdom and expertise.

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