Selling Out: Accountant's Role

April 13, 2006

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If you're thinking of selling your business, it's likely that your accountant will be one of the first people you turn to for advice. If you've used an accountant regularly to prepare your tax returns and draw up financial statements, he or she will be very well acquainted with the financial shape of your business. Most probably, your accountant also has other clients in similar businesses and can tell you how you compare to them. So, your accountant will be in a good position to know whether your business would be attractive to a potential buyer, and can give you some good ideas on how to make it more attractive.

Your accountant will also be essential in drawing up the historical and projected financial statements and other data required to place a proper value on your business, and in gathering and organizing financial data requested by the buyer during the due diligence phase of negotiations.

If you haven't been in the habit of getting audited financial statements, we strongly suggest that you do so now. If the accountant you've been working with is not a CPA, he or she may be able to recommend someone who can perform this service for you. Another possibility is to use a business appraiser or valuation expert who is also a CPA and can provide the audited statements as part of placing a value on the business.

As two of the key people in the team you're assembling to complete the sale of your business, it's very important that your accountant and your lawyer work well together. If they don't communicate frequently, they may end up duplicating some of each other's work, which means you may have to pay twice. In fact, you may want to use an attorney that your accountant recommends, or vice versa, specifically because you'll know that they respect each other and can cooperate.