At some point, most business owners have asked themselves this: what would it look like to sell the business?
It’s an intriguing question. The hypothetical returns involved in the scenario can be appealing; in today’s age of popular entrepreneurship, business exits are romanticized. A sale is a symbol of success – an opportunity for owners to reap the financial rewards for what they’ve built.
What’s less appealing to consider, though, is what’s needed in order to execute on a sale.
The process of selling a business is complex and involved. Finding the right buyer is difficult. There are myriad interests to balance. And the business must be transparent and have well-ordered processes for anything to move forward.
That’s where outsourced accounting can help. By ensuring the business can be understood by potential buyers, accounting plays a key role in facilitating a sale.
Here’s what dependable outsourced accounting provides, and what the process of preparing for a sale looks like.
What Dependable Outsourced Accounting Provides
There are two main outcomes to dependable accounting: consistency and transparency. Both are essential to the selling process.
Dependable accounting provides consistency. That’s appealing to potential buyers, because it reduces risk.
At Global Shared Services, our engagements focus on building and maintaining the financial infrastructure that will enable consistency (and eventually optimization). In the beginning of engagements, this involves identifying and remedying historical issues, then creating a calendar schedule for deliverables – vendor payments, payroll processing, required statements, bank reconciliations, etc. – to plan appropriate processes.
As processes are standardized and followed, eventually, the accumulation of data enables better financial insight.
As a consequence, the business becomes more transparent. In other words, potential buyers can understand what they’ll be getting. Cash flow, vendor costs, employee costs – dependable accounting makes the business comprehensible.
That’s important, because people want to know what they’re buying. It makes sense; if you’re buying a home, for example, you make sure to get a home inspection to uncover all information about the property so that you can make a fair decision. Without an inspection, you’d be less confident in the value of the property and the fairness of the deal.
It’s the same principle in selling a business. If your processes are managed by in-house accountants who have been running their own systems for years, it’ll be difficult for potential buyers to understand what they’re truly getting in a sale.
Businesses with non-standardized or inconsistent accounting represent a greater risk for potential buyers, and often generate lower returns as a result.
What the Selling Process Looks Like
So, outsourced accounting services benefit the selling process by imparting consistency and transparency to business financials. Now, let’s walk through some of the tactical steps that are involved from an accounting perspective during the selling process.
From an accounting perspective, the first stage of the selling process involves preparation for showcasing the company to potential buyers.
Depending upon the current state of the business’s accounting, preparation will be simple and quick (60 days to prepare documentation), or more involved over a longer span of time.
Typically, it involves things like:
- Ensuring processes are updated and repeatable
- Getting the company audited
- Ensuring the balance sheet is reconciled
- Documenting customer contracts
- Documenting vendor contracts
- Establishing cash flow statements
- Creating a three-to-five-year budget
Essentially, everything has to be in order, delivered with timeliness, and available with transparency.
Consulting isn’t a standard accounting offering, but it is something that we can provide.
On a basic level, this may involve offering an internal (not legally official) opinion of the business’s value to help the owner establish an idea of what to expect in a potential sale.
Additionally, we may consult on operational processes and updates that could increase business value; to some degree, these considerations can fall under our CFO services.
Finally, we transition accounting services from the previous ownership to the new ownership, depending upon what the situation calls for.
Some buyers prefer to have an outsourced solution in place and will maintain our service since we offer plug-and-play capability. We don’t get uncomfortable during transition in the same way that an internal accountant would, and our services transfer easily to new ownership contexts.
Some buyers prefer to maintain service through the transition, then phase in their own accounting solutions as they gain familiarity with their new assets. In these cases, we may work with the new buyer for three to six months to help them understand the business at a detailed level before transitioning the processes to them.
Even in scenarios where our services are scheduled to end, though, we sometimes earn a continuing engagement. For example, we’ve participated in deals where the buyer planned to terminate our contract within 90 days of close, only for them to expand our engagement instead based on satisfaction with our work.
The bottom line is that we’ll do whatever is needed to ensure that the transition goes smoothly, and that processes and operations get carried over well.
Want to learn more about the benefits of dependable outsourced accounting?
If you’re asking yourself the question, “what would selling look like?”, the answer is that from an accounting perspective, it looks a lot better with dependable outsourced services involved in the process.
And regardless of whether you’re considering selling or not, dependable outsourced accounting services can provide a foundation for your business’s success, by ensuring consistency and transparency in your business financials.
Want to learn more about how we could help your business? Let’s talk.
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Founded in 2003, we’ve worked with large corporations and small-to-medium businesses alike. Here’s what we’ve learned: access to expert financial and accounting services is a major factor in a business’ ability to succeed and scale. We believe that it shouldn’t be restricted by location or company size. Our mission is to empower restaurants and technology firms with that access.
With GSS, we meet our franchisor requirements on time and with accuracy. The local CPA could not handle our volume. We are so happy to have made the change. GSS knows our business and our franchisor requirements.Multi-unit fast sandwich Owner