Over a thirty-plus year corporate career with four years as a Corporate Auditor for General
Electric Company and over ten years as a Business Broker / M&A Advisor, I have seen many
kinds of accounting systems. This includes the impact of bad accounting practices on business
sales.
In 2018, a business owner, who was referred to me by his attorney, asked me for a business
valuation in preparation for selling his manufacturing business.
I obtained the tax returns, discussed the business’s unique features and came up with a
valuation of $1,000,000 to $1.2 million. He said he wanted a minimum of $2 million and we got
to work talking about how to improve business value. A key issue of this was the quality of his
accounting records.
I worked with him and we laid out what he needed to do with his accounting records to satisfy
sophisticated buyers. We discussed what he needed to do to grow the business, which had and
still has great potential. We established realistic new Revenue and Earnings targets to meet his
targeted $2 million plus payday.
He attacked these goals like he had when building his business from scratch. In two years, he
was making more money than he had ever made in the past, and fixed his accounting records.
Then, after six months of marketing, we found the “right” buyer who paid him $2.45 million. As an
Plus, he received a post-sale consulting agreement for doing the things he most loved about
the business.
Never, never retire in place! The best performing year of your business should be the last one
before you sell. Buyers do not pay for what the business was or can be. They buy because of
what it was and what it can be. However, they pay for the business, Looking back on the recent
financial performance history.
Dale Shepherd, Capital Business Solutions
Vice President and Managing Director, TN, NC, VA
Master Certified Business Intermediary
Certified Franchise Broker
Kingsport, TN
