Selling Your Business – Adjusting Company Financials

We must establish a price for your business before we begin the process of selling your business. Financial statements are the foundation of business valuations. Your financial statements should be “normalized” or “corrected” so we can optimally value your company. Financial “normalization” entails making numerous adjustments to your financial statements so the true earning ability of your business can be identified.

If you’re like many business owners, you have operated your business in a means that is calculated to minimize taxes.You might have provided yourself and family members as many perks and benefits as possible, kept offspring on the payroll, and plowed gains straight back to capital improvements. These and other common procedures are designed to keep your profits (and your taxes) low, possibly unnaturally so. But the requirement to “recast” or recalculate earnings will arise when you choose to sell.

The following are sample adjustments that may be made to your financial statements:

• Your salary and perks, and those of family members you don’t expect to remain with the company
• Expenses or income that would not be expected to recur or continue after the sale (for example, income or expenses associated with discontinued products, or gains and losses from the sale of any business assets)
• Investment or other non-operating expenses or income
• Interest payments on any business loans, since you’ll be removing such liabilities from the balance sheet .
• Owner health insurance, life insurance, auto expenses, etc.

It’s important to note that it is not necessary to normalize financials for every business. Your business may, or may not require this step. We will develop a specific game plan to sell your business with only the steps necessary to complete the sale. To acquire a personalized proposal please get in touch with us today.