Buyers don't buy your business — they buy your books, and then the business that the books describe. Financial preparation is the single highest-return work you can do before a sale, and most of it is simply making honest numbers easy to verify. Here is what serious buyers expect, and how to give it to them.
The core package: three to five years
For each of the last three to five fiscal years, expect to provide:
- Profit & loss statement — revenue, cost of goods, expenses, and net income.
- Balance sheet — assets and liabilities at each year's end.
- Business tax returns — buyers cross-check your P&L against what you told the tax authorities. Material gaps between the two kill deals faster than almost anything.
One year tells a buyer almost nothing — it could be your best year in a decade or a lucky one. Three years show a trend; five show a pattern through a full business cycle. That trend is also what drives a valuation's confidence score on this platform.
Add-backs: the legitimate way your price goes up
Most owners run some personal or one-time expenses through the business — a vehicle, family health insurance, a one-off legal settlement, the new roof. These are called add-backs, and documenting them raises your Seller's Discretionary Earnings, which is the number your price multiplies. A documented $30,000 of add-backs at a 2.5× multiple is $75,000 of additional price.
The rules are simple: every add-back must be real, provable, and genuinely non-recurring. “Trust me, I take cash” is not an add-back — it is a red flag that ends conversations. Work through the list with your accountant and keep receipts or ledger references for each item.
Make the business explain itself
Beyond the statements, buyers want to understand the shape of the revenue. Be ready to show: your top ten customers and what share of revenue each represents; any contracts or recurring agreements; and a simple breakdown of revenue by product, service line or location if you have more than one. None of this requires an accountant — a clear spreadsheet is fine. What buyers are really asking is, “if I buy this, what exactly am I getting, and how fragile is it?”
The mistakes that quietly kill deals
- Statements that don't match tax returns. Buyers assume the tax return is the honest one.
- A sudden unexplained jump in the most recent year — it reads as dressing the business up for sale, and buyers will price the earlier years instead.
- Commingled personal finances with no documentation. Commingling itself is normal; being unable to untangle it is not.
- Stale books. If your last reconciled month is eight months ago, get current before you list.
Presentation matters more than you think
Two sellers can have identical businesses and get different reactions purely from how the numbers arrive. A shoebox of PDF scans says “due diligence will be painful.” A structured table — revenue, EBITDA, SDE, assets, liabilities, year by year — says “this owner runs a tight ship.” It is exactly why listings on Succession Marketplace are built from structured figures rather than uploaded statements: buyers see your normalized financials as a clean table with charts, while your documents back them up behind the NDA.
A practical order of operations
First, sit with your accountant and rebuild the last three years into a consistent format. Second, list and document your add-backs. Third, run your numbers through a valuation calculator so you know the range your statements support. Fourth — and only then — create your anonymous listing, entering the figures year by year. You will see the independent valuation before you publish, and every serious buyer who follows will see clean numbers instead of a shoebox.