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Compiling Financial Documents to Sell Your Business

Compiling Financial Documents to Sell Your Business

When selling a business, your word on the company’s financials will not be enough. A buyer needs documented proof of everything. The more organized you are with the material, the higher chance you have of selling your business. Financial records track the company’s cash inflow and outflow. If you know where your money is going and coming from, you can determine how to make your business more profitable. Below you will learn what financial documents to compile when preparing to sell a business.

Financial documentation is also necessary when receiving a business valuation. The documents you show a potential buyer are similar to the documents needed to perform a business valuation. If the company doesn’t keep detailed financial records it is difficult to sell a business and an appraiser is unable to perform the valuation. Peak Business Valuation, business appraiser, would love to discuss more in-depth what financial documents are required for your valuation. Feel free to contact us below and schedule a free consultation.

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Necessary Financial Documents

In this section, we give a brief overview of the financial documents you will need to sell your business. This specifically includes the documents required when getting a business valuation. Keep in mind, these documents must be professional and legible. 

3 Years of Consecutive Financial Statements

The first financial documents you need are the past three years of financial statements. Having these documents will allow a potential buyer to take a look into what this business actually looks like. It will give them an idea of what their expenses and profits will be. These financial statements include income statements, balance sheets, cash flow statements, and a statement of the seller’s discretionary earnings. A valuation expert uses these documents to get a better understanding of the operations of the business. The expert uses these documents in their financial statement analysis. This is key to determining a fair market value for the business.

Financial Charts and Ratios

Next, financial statements require interpretation for the information to be useful to the buyer. Before presenting these statements to the buyer, prepare simple trend charts and financial ratios. Doing so helps explain the statements in a more user-friendly atmosphere. These charts can also present what kind of opportunities are available in the business for the buyer.  These charts and ratios are a great way to promote a positive experience for your buyer and help them see what they can do with this business. Taking the time to prepare before handing over a business is crucial. 

Through a business appraisal, Peak Business Valuation, business appraiser, presents financial trends such as those mentioned above. They can be found in the appendix of a business valuation report. As such, a business appraisal is very helpful in this part of the process. Peak helps buyers and sellers every day prepare for this new journey. For any questions, please reach out. We would love to help this process go smoothly for you. 

Backup Records

Supporting financial documents is also necessary. This can include items such as, tax returns from the past three years, bank statements, and other forms that help prove the accuracy of your financial statements. If a buyer is smart and thorough, they will go through a due diligence process. This process is very detailed and helps ensure the buyer is making a smart decision. These documents will support your numbers and create a trusting environment between buyers and sellers. 

Business Valuation

Last, an easy and safe way to compile financial documents is through a third-party valuation company such as Peak Business Valuation. The valuation company will not only compile these documents, but interpret the numbers to provide a value, or worth of the company. This can help in a seller’s transaction to ensure they are getting a fair amount for the business. While it is possible to create trends and ratios on your own, a more trustworthy way is through a professional valuation. 

Peak Business Valuation, business appraiser, performs appraisals on businesses across the nation. We work with buyers to help them feel confident in a purchase price. We also work with sellers to determine a fair listing price and understand what impacts the value of their business. In either case, obtaining your own business appraisal can help you negotiate a purchase price. 


These important financial documents are needed in order to sell a business. A business valuation is one of the first steps when selling a business. A business appraisal requires such documents for the valuation expert to create trustworthy models in the business valuation. 

A quality business keeps track of every minor detail in their business. This documentation not only helps the business be more successful but is helpful in understanding the cash flow of the business. This includes proof of revenues and expenses. Accurate and up-to-date financial documentation is crucial to a business valuation and can help potential buyers understand what they are getting into. 

Peak Business Valuation, business appraiser, helps sellers every day take the first steps in selling their business. A business valuation takes all of the financial documents and compiles them into an easily understood report. This report is important for a buyer and a seller. It can create a safe and trustworthy space for the transaction. Be advised, both the buyer and seller should obtain an independent valuation. Doing so can help when negotiating a fair purchase price. Please reach out with any questions, we are happy to help! Schedule a free consultation using the link below. 


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