Quick takeaways
- An offer is a price based on what the buyer has seen so far, and diligence tests it.
- Books that do not reconcile can sink a deal even when the earnings are strong.
- Stale records, loose leases and off book pay all give a buyer a reason to lower the price.
- Fix these items before you list, not after the offer arrives.
An offer is a starting point
The first number rests on a summary of your company. Once the buyer signs on and the deposit is down, they check every claim against the tax returns, bank statements and contracts.
Diligence usually runs a couple of weeks, and the deposit is generally refundable until it ends. That gives the buyer room to ask for changes.
What buyers ask for first
- Tax returns, profit and loss statements and a balance sheet
- Bank statements that match the reported sales
- Your lease and a list of assets with serial numbers
- A staff list with pay and hire dates
Lenders repeat many of these requests, so keep everything in one shared folder.
Books that do not reconcile
Unreconciled books are among the most common deal killers. A buyer who cannot tie sales to deposits assumes the worst and either cuts the price or leaves.
Stale balance sheets also hurt. A truck you sold two years ago that still appears on the list tells the buyer your bookkeeping is weak.
Other triggers for a price cut
A lease near its end or one on month to month terms puts the location at risk. Customer concentration is another, because a buyer may reduce the price by roughly the share of sales the top accounts represent.
Payroll problems matter too. Off book pay and unclear worker status are red flags that buyers weigh heavily.
What to do before listing
Ask your CPA to bring the books current and reconcile them. Recast your profit and loss statement with every add back supported. Read the lease, and talk to the landlord about an assignment.
Keep performance steady during the sale as well. A dip makes buyers nervous, and a sudden spike makes them suspicious. For a first look at your range, ask for a free value check.
More on structure is in asset sale or stock sale.