My business broker is asking for 5 years of historical financials and 3 years of projections. We’ve never done that in the past and ran our business just fine. Why is this important?
Not to mention books that are complete and accurate, built according to Generally Accepted Accounting Principles (“GaaP”), recorded on an accrual basis. You get the idea. Why is this important? It’s the same reason why banks want a minimum of two-years of tax returns for all the business owners, why large customers want to see your financial statements, and why potential investors are so keen to gain an understanding of your “numbers” before deciding to invest. Your financial statements are like your resume. If your resume has typos and grammatical errors, a recruiter would throw it in the trash within seconds. It’s the same thing when trying to sell your business. Your financial accounting records are your resume, and prospective buyers use that and a host of other documents to decide if they’d like to buy your business.