Value Driver Series #3 – Financial Performance

We are talking about more than just the numbers when it comes to financial performance as a value driver.

Financial performance goes beyond simply assessing the top line revenue and the bottom-line profits. This value driver also includes the reporting quality of those financial numbers.

Without question, the numbers themselves are extremely important when speaking about a business’s financial performance. But can you defend those numbers? If a third-party buyer is interested in purchasing your business, will this buyer have any reason to question those numbers?

A third-party buyer is going to want the numbers you are providing to be backed-up and supported through accurate records. This will create trust in the numbers you have provided. Moreover, that third party buyer is going to want to see a recent history of sales and profit. If there is growth within the business that has been accurately translated through reporting, a potential buyer could identify the following:

• The business is well managed
• There is a potential for profit and growth in the future
• The business does not suffer from one-off growth surges or declines

Professional, accurate and up-to-date financial information is critical to give a buyer confidence about the future of your business. Have you just done the minimum for financial reporting, or do you have comprehensively prepared financials reviewed by a professional CPA? Many owners self-prepare financial reports rather than spending time with a CPA. With the help of a CPA and other finance/accounting professionals, you will have more accurate records which will help you identify the strengths and weaknesses within your business.

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This blog article is for informational purposes only.  It does not create an attorney-client relationship and is not intended to be regarded as legal advice.