Familiarise Yourself with What Records Buyers Will Want to See
Balance Sheets: A balance sheet displays the accounts and ledgers at a specific point in time, making it a useful financial document to compare the health of your business at different periods. Comparing balance sheets for the last five years illustrates the growth of the business and its overall financial health. When analysing your balance sheet, buyers will be trying to determine whether your business has stable asset levels and inventories, solid cash flow, and as little debt as possible.
Profit & Loss Statement for the last five years: This statement will of course vary for each business, as the line items are different for each. However, every profit & loss statement should include revenue growth of the last 5 years, EBITDA margins, operating expenses, production costs, and interest expenses.
5-Year Forecast: This is the really exciting part for both you and the buyer. For you, it's a chance to show off the potential of your business based on its current trajectory, and for the buyer it allows them to envision the future of their potential investment. The numbers should illustrate your predicted valuation in the next 5 years, and since they will be highly scrutinised by buyers, it's crucial that they are realistic.