What follows is a practical guide to strengthening transparency and building buyer trust - a checklist to consider prior to selling your business
Buyers want clarity. The more transparent, accurate, and consistent your financials are, the higher the trust and the smoother the due diligence process. A lack of financial visibility can lead to valuation discounts, delayed settlements, or deals falling through entirely. If you want to maximise sale value and minimise surprises, now is the time to prepare your financials for scrutiny.
This article outlines how to clean up, improve, and present your financial records before listing your business for sale,including a comprehensive checklist to work through with your accountant or advisor.
Clear financials help buyers answer key questions about your business: Is it profitable? Is revenue recurring? Are costs under control? Is the business scalable? When your numbers are clean, buyers are more confident and often more competitive. Poor or incomplete reporting, on the other hand, invites doubt and opens the door to renegotiation or retreat.
Using software such as Xero or MYOB provides real-time access to financial performance and simplifies sharing information with your broker or prospective buyers. It also improves auditability and removes manual errors.
Buyers will want to verify that all revenue and expenses relate to the business. Personal expenses, ad hoc drawings, or cash transactions should be removed from operating records. Ensure owner benefits or discretionary expenses are clearly documented for add-back purposes.
Most buyers will request at least three years of:
Ensure these are consistent and reconciled across all systems, including your accounting software, ATO filings, and bank records.
Revenue visibility is essential. Categorise revenue into meaningful segments, such as by product, service type, geography, or customer type. Highlight recurring revenue, subscription income, or contracts where applicable. This helps buyers assess predictability and growth potential.
Not all expenses are ongoing. Prepare a schedule of adjustments that normalise profit, including:
Well-prepared add-backs support a higher EBITDA valuation and strengthen buyer confidence.
Ensure your stock & inventory levels, accounts receivable, and payables match your internal records and are accurately reflected in your balance sheet. Buyers will look at working capital closely, especially in asset-heavy or inventory-based businesses.
Prepare forward-looking financial projections, ideally 12 to 24 months, showing revenue, expenses, and cash flow. Base these on real assumptions and historical performance. Include any known changes such as lease increases, upcoming contracts, or cost savings.
Buyers often want to see that you track key performance metrics. Consider preparing monthly dashboards that show:
Even basic reporting gives the impression of a well-run, data-driven business.
Get professional advice on tax structuring, CGT concessions, and timing issues. Consider:
Financial clean-up should be done early, not after a buyer is at the table.
Buyers (and their accountants) will request documents. Store all financial files in a shared cloud folder, ready to be sent to qualified buyers under confidentiality agreements. This should include:
Fast, complete access makes due diligence smoother and reinforces credibility.
Use this checklist to audit your readiness:
If you plan to sell in the next 6 to 18 months, work with our melbourne business brokers now to prepare your financial reporting for buyer due diligence and valuation discussions.
Business Type: Wholesale Electrical Supplies Location: Western Sydney, NSW
Background
An owner-operated electrical supply business with over 15 years of trading history was preparing for sale. The business had strong customer relationships and consistent revenue, but the financial records were disorganised. The owner used a desktop accounting system and had a habit of blending personal and business expenses, which caused confusion during early broker assessments.
Action Taken
With guidance from a business broker and accountant, the owner implemented the following steps over a 9-month period:
Transitioned to Xero for cloud-based accounting
Stopped all personal expense allocations through the business
Rebuilt clean P&L and balance sheet statements for the past 3 years
Worked with their broker to identify and document valid EBITDA add-backs
Segmented sales by customer type and product category
Prepared detailed KPI reports (e.g. gross margin by category, stock turnover)
Created a cloud-based data room with reconciled BAS, tax returns, and payroll summaries
Result
The business attracted 3 offers and sold to a strategic buyer at a 5.1x EBITDA multiple, 0.6x higher than expected. The buyer cited "exceptional transparency and clean books" as a major factor in their confidence and willingness to move quickly during due diligence.
Improving financial visibility is one of the highest-impact steps you can take before selling your business. Buyers reward transparency, and a business with clean, well-documented financials is more likely to achieve a strong price, avoid contract delays, and build trust throughout the transaction.
