Preparing Your Financials to Sell a Business in Austin
Start eighteen months before you want to sell. The work that protects your price is slow, and the year you spend on it is the highest-return year of the whole process.
I've been on the other side of this table. At Johnson & Johnson I worked acquisition and divestiture operations, running diligence and separation planning on live deals. What I learned there is that diligence rarely kills a deal because the business is bad. It kills deals because the numbers can't be explained.
What a buyer is really doing
A buyer's finance team is testing one thing: whether your reported earnings are repeatable.
Every adjustment they can't verify comes out of the number they're willing to pay. They aren't trying to be difficult. They're building a case they can defend internally, and anything ambiguous gets resolved against you.
That's why the quality of earnings review matters more than the valuation conversation. By the time price is being negotiated, the number is largely set by what your records can support.
The item that damages price most often
Revenue recognition.
If you recognise revenue when you invoice rather than when you earn it, or in a lump when a contract signs rather than across the period you deliver it, your monthly profit is fiction. Good months and bad months are an artefact of timing, not performance.
A buyer will normalise it, and normalising almost always lowers the earnings figure they underwrite. Worse, it makes every other number you present look uncertain.
This is fixable, but not quickly. Restating revenue recognition and rebuilding a trailing 24 months on the corrected basis takes time, which is the real argument for starting early.
The rest of the list
- Personal expenses run through the business. Every add-back needs documentation a stranger would accept. Undocumented add-backs get denied.
- Cash basis books. Most buyers underwrite on accrual. Converting during diligence looks like you're changing the story mid-process.
- Customer concentration. Not fatal, but it must be surfaced and explained by you first, not discovered by them.
- Inconsistent monthly close. If months were closed loosely, trends can't be trusted, and untrusted trends get discounted.
- No data room. Scrambling for documents signals that the rest is disorganised too.
What I do on these engagements
I work backward from what a buyer will ask. That means correcting revenue recognition on a defensible basis, documenting add-backs so they survive scrutiny, rebuilding trailing financials on a consistent basis, and preparing the diligence package before anyone requests it.
I'm Ben Cohen, founder of Visionary Arc Finance and a former PwC Senior Manager. I work remotely with Austin and Central Texas companies, alongside your CPA and your broker or M&A advisor rather than in place of them.
The goal is simple. When the buyer's analyst asks why margin moved in a given quarter, there's a documented answer ready.
Common questions
How early should I start?
Eighteen months is comfortable. Twelve is workable. Under six months, you're mostly managing damage rather than improving the outcome, because a corrected revenue basis needs trailing history to be credible.
Do I still need a broker or M&A advisor?
Yes. They run the process, find buyers, and negotiate. I make sure the financial story underneath survives examination. The two roles complement each other.
What if my books are genuinely messy?
That's common and it's the reason to start early rather than a reason to delay. Cleanup before a process is ordinary preparation. Cleanup during a process reads as a red flag.