A couple of cars on your company’s books could leave a buyer wondering what else they haven’t found.

In one transaction Wood Stabell Law Group handled, the owners had run personal expenses through the business, including leased cars they didn’t even want after the sale.

The deal was structured cash-free, debt-free, so those leases had to be addressed before closing. The buyers faced buying out cars they didn’t want simply to get them off the company’s books.

It was an inconvenience. By itself, it wasn’t a deal killer.

But it prompted questions that went well beyond the cars.

What else is running through the business?

Once the buyer saw those expenses, the questions started.

Which expenses were actually business expenses? Which were personal? What did the company really cost to operate?

The cars became part of a bigger concern: could the buyer trust the numbers?

Each unclear answer led to another document request, another explanation, and another reason to wonder what else might turn up.

If you’ve owned your business for years, you may know exactly which expenses belong to the company and which reflect personal perks. Your buyer doesn’t have that knowledge.

They need to understand the financial picture without relying on explanations only you can provide.

Your numbers tell a story

You might think cleaning up your financials is mainly about good bookkeeping.

A buyer is looking for something more: confidence that the numbers accurately explain the business they’re purchasing.

Buyers understand that privately held companies aren’t always pristine. Owner perks and personal expenses aren’t necessarily a surprise.

But the buyer still needs to understand what’s included, what those expenses represent, and what it actually costs to run the company.

When that information is difficult to untangle, even a manageable issue can lead to a much longer conversation.

Address the questions before a buyer asks

If selling is part of your future, take time now to understand what your financial records show.

Can you clearly explain the expenses running through the business? Can you distinguish personal costs from operating costs? Are there obligations that will need attention as part of a sale?

Getting those answers organized before due diligence gives you time to address confusion while there’s less pressure.

In this transaction, the cars weren’t the central issue. The questions they raised were.

Cleaning up your financials helps you give a buyer a clearer picture of what they’re buying and fewer reasons to wonder what else they might find.

What might your numbers lead a buyer to ask? Download our complimentary Deal Readiness Checklist to start identifying issues before a buyer does.

The information provided in this article is for informational purposes only and does not constitute legal advice. No attorney-client relationship is formed by virtue of this article. For specific legal advice related to your situation, please consult with a qualified attorney.