Importance of Clean Records

Murphy Business Transfer Report

Incomplete or inaccurate records may negatively impact your sale price.

Many times a business owner “lives” out of his business, and his books and records are not kept as well as they should be.  Even with a solid, well-run business, incomplete or inaccurate records will negatively affect the sale price or even prevent a sale.

Too many personal expenses run through the business, personal assets purchased through the company and “owner-to-prove” cash can be especially detrimental and used as strong negotiating points on the buyers behalf.

If a buyer needs to obtain outside financing for a business and the records are not consistent, this could cause a bank to reject a loan.  Even worse, a buyer might not feel comfortable enough with the records and never make it to the point of placing an offer.

Having good, clean records is absolutely essential in a business transfer.  If a proper paper trail for revenue and expenses cannot be documented and supported, it is unlikely that the seller will receive his asking price.  In fact, one of the biggest reasons deals fail after the sales contract is signed, is bad records.

Start planning now. Pull back unnecessary personal expenses, recognize all cash sales and never pay employees “under the table”.  What you may save in taxes today, will not begin to cover the loss to your business value during a sale.

Dan Carelli
Certified Business Intermediary
321 544-9595

Murphy Business & Financial Services – Florida’s Largest Business Brokerage

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