Never Overlook Your Accounting Processes

We’re often asked, “What can we do to get our business ready to sell?” and “How can we make our organization look attractive to buyers?” There are many answers to those questions (and we’ve written about some in the past here and here), but often the simplest answer is the most overlooked. Make sure your books are in order.

AmiSights recently wrote a post about a client who wanted to pivot quickly, making a strategic change for her company. The author was more than happy to help, until the state of her accounting system was revealed. As he said, “She built her house without a foundation, it’s catching up with her.”

Dysfunctional and manual financial reporting processes are expected to cost U.S. businesses $7.8 billion this year, according to a report released earlier this year by DataRails and economists at the University of Baltimore. Much of that amount is attributed to financial planning and analysis teams spending at least two hours on manual work each week, with annual company budgets taking up to six months to prepare.

There is really no excuse for manual financial reporting in 2022. If basic, routine processes take that much time each week and each year, then imagine the headache that would be caused by an average due diligence process if that company were to receive an offer from a buyer. The potential buyer would very likely walk away.

The M&A process is designed to provide potential buyers with a clear picture of what they are about to buy. When it works correctly, both the buyer and seller proceed through the process with open eyes and a comprehensive understanding of the transaction, its pros and its cons. With up-to-date books, modern automated reporting, and an adherence to basic accounting principles, this is a very achievable goal.

If you are considering selling your business, please contact us for a confidential discussion of your specific situation. We have experience helping business owners across a variety of industries sell their businesses, as well as relationships with buyers who are interested in new opportunities.