What financial information will a buyer need to know about my business?
The level of information required by a buyer will increase over the course of the business sale process. Initially, potentially interested buyers will be provided with very little by way of financial data.
Only after a signed Non-Disclosure Agreement (NDA) is in place will a buyer begin to receive granular data on your business. Initially a buyer would expect to see a detailed Profit and Loss (P&L) Account and Balance Sheet for the last three years, with detailed explanations of significant trends and year-on-year movements.
Your ultimate buyer would typically want to see your Trial Balances, Management and Statutory Accounts and reconciliations, tax computations, fixed asset lists and more
In addition, to help a buyer understand the business and how it truly performs, further financial analysis will be needed. This would typically include revenue and margin by customer and/or product for historic periods, or Capex requirements and utilisation rates if your business is asset heavy. It would also be common to share a forecast P&L for the next few years, and the assumptions supporting it.
When you reach agreement with a potential buyer and enter the Due Diligence stage, then you need to provide all financial information required by your buyer. A buyer would typically want to see your Trial Balances, Management and Statutory Accounts and reconciliations, tax computations, fixed asset lists and much more besides, to ensure your reporting is reliable and robust.
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