Document Assembly

Document Assembly Required To Sell Your Business

We Help You Assemble The Documents You'll Need

Assembling and preparing documents in advance is essential. It could take some time. It will involve aggregating, copying and also preparing some documents from scratch. You, your company financial executive, and your accountant/CPA will need to be engaged in the process.


Assemble the following documents to prepare for your business sale:

  • Income Statements for the current and past 3 years
  • Current balance sheet and past 3 years
  • Income Statement and Balance Sheet to be re-casted
  • List of Add-backs etc., for each year and current
  • Cash flow statements
  • Business tax returns for the past 3 years
  • Copy of the current lease
  • Real Estate business owned. Appraisal
  • Insurance policies
  • Executive summary of overview of the business
  • Detailed profile describing the business
  • Any additional documentation to substantiate the financial representations
  • Accounts Receivable. Aging Report. Accounts Payable.
  • Legal Actions, if any
  • Client list. Client make-up
  • Website. Marketing Materials.
  • Professional certificates
  • Supplier and distributor contracts
  • Employment agreements
  • Offer to purchase agreement
  • Note for any seller financing
  • Personal financial statement for the buyer to complete


Once all the documents are assembled, they will show a financial picture of the business. Recasting the financials is an important next step. By recasting the financials, factoring out non-operating expenses, for example, we can arrive at comparable financials that can be used in a more thorough market based valuation.
From that we can best determine the strategy going forward.


Recasting Financial Statements:

These are business financial statements that are adjusted to reflect the actual financial benefits of the business owner(s).  Recasting might also be referred to as reconstructing or normalizing the financial statements.



Most small businesses are managed to minimize taxable income. Thus, it is often necessary to make adjustments to the reported financial statements in order to express the actual cash flow benefits available for the owner. Adjusting the business financial statements facilitates its comparison to the industry standard ratios.


Here are some balance sheet items that may require adjustment:

Accounts Receivable. Review an accounts receivable aging report and remove un-collectible accounts, taking them as a bad debt expense.


Inventory. Inventory that is not good and sell-able or that has become damaged or obsolete should be adjusted out.


Prepaid Expenses. Prepaid expenses should be adjusted out if they do not remain with the buyer after the business purchase.


Cash and Cash Equivalents. The seller typically retains cash and cash equivalents. Adjust the balance sheet to have the amount of cash required for running the business.


Shareholder Due or Liabilities. Remove any amounts due from shareholders as assets or due shareholders as liabilities.


Book Value of Assets.  If you plan on an asset purchase you may wish to adjust or “step up” these to their fair market value. This will give you tax advantages due to a higher basis for asset appreciation.


Real Estate. If Real estate is not owned by the business, remove it as it is not a part of the business purchase.


Intangible Assets. Carefully review such intangible assets as business goodwill to determine if they should be adjusted.


Liabilities. If some liabilities, like accounts payable, have been accumulated without being paid, they must be added to the balance sheet. Some items on the Income Statement that may require adjustment are:


Cost of Goods. Adjust cost of goods to historic averages. It is possible that the business has been using lower cost inventory that may not continue in the future.


Owner’s Salary. Adjust  owner’s salary to a market rate.


Family Member’s Salary. Review and adjust salaries of family members to market rates, if they work in the business.


Depreciation. Review and adjust depreciation expense consistent with the expected useful life of the underlying assets.


Business Rent. Adjust the business rent to a fair market rate. If the business owns its real estate premises, include a fair market rent as a business expense.


Owner’s Expenses. Adjust expenses that are incurred at owner’s discretion. Examples are some travel and entertainment, vehicles, memberships, bonus payouts and others.


One-time Expenses. Factor out any one-time expenses that are unlikely to occur in the future.



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