Accounting Principles to Consider Prior to Selling your Business
February 25, 2020
It pays to come prepared before entering any business transaction, particularly if you are selling your business. No one likes surprises and a lack of clarity during the process, both on the buyer’s side, as well as on your end as a seller, can lead to major problems. However, there are several accounting steps to consider ahead of time that can help the process run more smoothly.
This episode of Deal Talk with 7MA features Pat McKay from Templeton & Co., a full-service accounting firm. McKay dives deep into the necessity of planning and preparing before a transaction, especially on the accounting and numbers aspect in the business. (02:50)
She stresses how doing the books and other accounting tasks well in advance can help you tell the story of your business better. Having your books aligned shows stability in your business and you can gain confidence from potential investors. (06:45) It also allows you the opportunity to spot any issues and correct them beforehand. Besides confidence, you also increase credibility, giving your business extra plus points to the other party in the transaction.
McKay also shares a few tips and strategies that can help you prepare prior to a business transaction. She stresses that preparation has to happen months in advance (15:51), and if possible, to start as early as you can. (21:38)
It’s also a good idea to hire a third-party auditor or an independent group to take a look at the numbers, as your in-house team may not have the necessary background and skill set to do the task properly. (09:24)According to McKay, the best situation is when you get to talk more about your business and your value drivers, rather than just explain what these numbers mean to a buyer. (24:53) And this can only happen when you have your accounting documents done and in order.
To find out more information about Pat McKay and Templeton & Co., visit their website at https://templetonco.com/.
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