With many baby boomers nearing retirement age, and strong demand for quality companies in the M&A market, many small and mid-sized business owners are preparing for their potential exit strategies in the form of a sale. For those considering a sale in the near future, accurate and reliable financial statements are essential to making it through the merger and acquisition process successfully. Unfortunately, many small and mid-sized businesses may not have had a requirement for a financial statement audit or review in the past. Their financial statements may not be in great shape, and some might not keep their accounting records on an accrual basis. While this may not have hindered the company’s success in the past, it could be a big stumbling block during the acquisition process. In order to help market a company during a potential sale, both historical financial statements and forecasts for the future will likely need to be provided to potential buyers. If you are fortunate enough to get to the due diligence stage in selling your business, the requests for financial information and reports can be very burdensome. Being proactive and getting your books in order is critical for a smooth due diligence process.
Alternatively, many business owners might see their exit strategy being five to ten years down the road. While you won’t need to present financial statements to buyers in the meantime, a value-added accounting and finance function can help in the path to growing the company and reaching long-term goals. A successful finance function will provide forecasting, budgeting, and financial modeling to both guide the company forward and be able to look back and measure results. It can also help identify cost-cutting measures and operational improvements needed to drive growth and profitability across the organization.
The tight labor markets, rapidly evolving technology and a lack of resources at small businesses have made it difficult for many businesses to find the right mix of labor to create an effective and efficient accounting and finance department. This puts a strain on the business and leads to many of the issues stated above where companies aren’t fully prepared for the financial component of the acquisition process. At E. Cohen & Company CPAs, our outsourced accounting department will build a team specifically designed to meet the needs of each individual organization. In some cases, that may include the full Accounts Payable, Accounts Receivable, and month-close process. In other instances, a team focused solely on quarterly financial modeling and budget analysis may be the right fit. Some benefits of our outsourced accounting model include:
Increased financial and accounting expertise
Timely and accurate financial reporting
Reduction in salary, benefit costs, and office space needed
Reduction in time spent hiring, training, and retaining staff