By the time a buyer asks to see your financials, it's too late to fix what's wrong with them. The businesses that sell for what they're worth are the ones where the numbers have been in good order for a year or two before anyone else sees them, not tidied up the week before.
Most owners think of "getting ready to sell" as a legal exercise: find a buyer, agree a price, sign a contract. In practice, the sale is won or lost earlier than that, in whether your financial story holds together under scrutiny. A buyer's accountant will pull your numbers apart before their lawyer ever reads your contract.
Thinking about selling in the next one to two years? The earlier we look at your numbers, the more of the value you keep.
Book a Free Consultation →Why the Numbers Matter Before the Buyer Does
A buyer isn't paying for what your business did last month. They're paying for a multiple of what it reliably earns, and that multiple is only as trustworthy as the financial history behind it. Inconsistent bookkeeping, undocumented cash income, or a personal Netflix subscription still running through the business account doesn't just look untidy. It makes a buyer's accountant discount everything else you tell them, including the numbers that were genuinely clean.
Confidence in your numbers is what lets a buyer move quickly and pay full price. Doubt about your numbers is what turns a strong offer into a lowball one, or a slow six-month due diligence process into a stalled deal.
Clean Up What a Buyer Will Actually Look At
Before you approach anyone, get two to three years of financial statements and tax returns into a state you'd be comfortable handing to a stranger. In practice that means:
- Separate personal and business expenses properly, going back far enough that the pattern is clear and consistent, not just fixed for the current year.
- Reconcile your bookkeeping so the numbers in your accounting software match your tax returns and your bank statements without unexplained gaps.
- Bring management accounts up to date: a buyer will want to see how the current financial year is tracking, not just the last lodged return.
- Document anything unusual: a one-off contract, a client you lost, a bad debt written off. Buyers are far more comfortable with an explained dip than an unexplained one.
Know What "Add-Backs" a Buyer Will Actually Accept
Owners commonly try to present a higher "normalised" profit by adding back expenses that supposedly wouldn't continue under new ownership (their own salary above market rate, a personal vehicle, one-off legal costs). Some of this is legitimate. Much of what owners submit as add-backs gets challenged, and a rejected add-back late in negotiations damages trust in every other number you've presented.
The add-backs that hold up are the ones that are well documented, consistently applied year over year, and reasonable by industry standards. Building this schedule with your accountant well before you list, not during negotiations, is what makes it credible.
Your business structure also decides what can actually be sold, and what tax applies when it is. We cover that in the companion piece on the tax side of a sale.
Tax on the Sale of a Business →Get Your Structure Question Answered Before You List
Whether you're a sole trader, a company, or operating through a trust changes what a buyer is actually purchasing (the business assets, the shares, or units in a trust), and each path has different consequences for both sides. If your structure was set up years ago for a different reason (asset protection, income splitting, a since-departed business partner), it's worth checking it still fits before a buyer's lawyer finds a complication you didn't know you had.
Build the Data Room Early
Serious buyers will ask for a defined set of documents once discussions get real: financials and tax returns, the add-back schedule, key contracts (leases, supplier and customer agreements, employment contracts), any outstanding disputes, and evidence of compliance (super, payroll, insurance). Assembling this before a buyer asks for it, rather than scrambling once they do, keeps momentum on your side during due diligence, which is where deals most often lose pace or price.
How Phan Campbell & Associates Can Help
At Phan Campbell & Associates in Footscray, we work with business owners on both sides of this: getting the numbers into shape well ahead of a sale, and, when you're ready, the legal side of the transaction itself. Because we do both under one roof, the financial story we help you build and the contract our lawyers negotiate are built to match, not reconciled after the fact.
If a sale is somewhere in your next one to two years, the best time to talk to us is now, not once a buyer is already at the table.
Frequently Asked Questions
1. How far ahead of a sale should I get my numbers ready?
Ideally 12 to 24 months. Buyers and their accountants usually want two to three years of clean, consistent financials. If your bookkeeping has been inconsistent, or personal and business expenses have been mixed together, that history needs to be untangled and explained well before a buyer sees it.
2. What is an add-back and will a buyer accept mine?
An add-back is an expense in your accounts that a buyer's accountant agrees would not continue under new ownership, such as your own above-market salary, a personal vehicle, or a one-off cost. Buyers only accept add-backs that are well documented and consistently applied. Vague or aggressive add-backs are one of the fastest ways to lose credibility in a negotiation.
3. Does my business structure affect what I can sell?
Yes. Whether you are set up as a sole trader, company or trust affects whether a buyer can purchase the business assets, the shares, or the trust's units, and each path carries different tax and liability consequences for both sides. This should be reviewed well before you go to market, not once an offer is on the table.
4. What should I have ready before I approach a buyer?
At minimum: two to three years of financial statements and tax returns, a clear add-back schedule, up-to-date management accounts, key contracts (leases, supplier and customer agreements, employment contracts), and a summary of anything unusual in the numbers. Talk to us before you start those conversations so the story your numbers tell holds up under a buyer's due diligence.