The most exciting moment of the takeover
In the sales process there comes a moment that the future buyer can literally pull out all the stops:the audit. This is always an exciting moment for many entrepreneurs. The buyer indicates in advance which research areas he or she considers important. The financial investigation is often the most important part. We list a few tips on how to get through the financial due diligence flawlessly.
Ensure that financial reporting has been prepared in accordance with the official accounting rules
When the reporting is done with the correct, complete and timely accountant's report, it certainly benefits the book review. This makes the assessment transparent and prevents any comments that could lead to a reduction in the sale price. Therefore, make sure that you reserve time with your accountant so that he can quickly and completely prepare the annual accounts after the end of the financial year.
Provide monthly reporting figures
Monthly reporting figures provide up-to-date management information. When there is too much time between the different benchmarks, this causes less grip on the situation.Timely insight ensures that you can intervene faster, which in turn ensures a more appropriate decision. Financial investors in particular often only want to invest if the company has its -financial- management reports in order.
Make sure your forecasts include all the essential decisions
The purchase price is often partly or entirely based on prognoses. These prognoses are in turn based on certain assumptions. It is advisable to check whether all business activities and plans are included in these assumptions, and from the correct starting date. If a strategic action is implemented earlier or later than planned, this can have a significant impact on the forecasts and can be addressed in a timely manner with the Buyer.
Stay aware of customer dependencies
The dependence on a limited number of customers increases the financial risk for the prospective buyer. When the turnover is widely spread over different customers, this risk is eliminated. When there is a high dependency on a small number of customers, it is wise to mitigate the dependency by, for example, fixing the agreement for several years.
Consider the impact of open positions
Financial administration is always in motion. With some regularity a snapshot is taken. However, it may be that the snapshot from the past works to your advantage or disadvantage at a later date. Items such as 'turnover to be invoiced' or 'net working capital' can take a positive or negative turn during the audit. This changing picture can impact the determination of the purchase price. Also here it is possible to avoid surprises during the due diligence by good pre-study.
It remains an exciting period:the audit.