Reported earnings are only the start

Buyers examine revenue recognition, customer concentration, owner expenses, nonrecurring items, margins, accruals, and the relationship between earnings and cash flow.

Preparation is not cosmetic

A sell-side review should not manufacture adjustments. It should identify supportable normalization items, correct errors, and prepare management to explain the economic performance of the business consistently.

Early work protects the timetable

Issues discovered before launch can often be addressed thoughtfully. Issues discovered during buyer diligence can delay the process, reduce confidence, or change price.

Questions for Owners

Questions worth considering

  • Can every adjustment be supported?
  • Do monthly results reconcile to annual reporting?
  • Which accounting judgments are likely to receive the most scrutiny?