Here’s the fourth installment of F12’s M&A Video Series: Streamline Your General Ledger
Are you wondering: why should I streamline my general ledger?
When preparing to sell your business, it’s imperative that your company’s general ledger is in order. A general ledger is a thorough record of every transaction made within your company. So why is it so important that it’s neat and tidy for potential buyers? Michael Contento, F12’s Managing Partner and Business Innovation Executive, shares his own experience when preparing his MSP, MBU, for sale.
“After 26 years in business, my company’s data was a big mess. Nothing was organized.” Instead of having a pared-down number of ledgers, Michael’s accounts were all over the place. He discovered that not only was it difficult to get a proper valuation of his business, but that MBU was, in fact, losing nearly $40,000 in profits due to unidentified errors.
Cleaning and streamlining your general ledger enables you to truly understand your company’s margins because you have a clearer picture of your company’s financial health. When a buyer is performing their due diligence, having a streamlined general ledger greatly speeds up the process—which leads to appreciation and trust on the buyer’s end.
The takeaway
If you’re looking to sell your business, you need to make sure you’ve streamlined your general ledger because:
- Once you can make sense of your numbers, you’re able to identify where you’re losing money—and fix it before you do your valuation.
- A potential buyer needs to perform due diligence. If your numbers are neat and tidy and your business operations are smooth, that is going to appeal to the buyer.
Michael digs deep into how to streamline your general ledger in his blog post on the subject.
Have more questions about preparing to sell your business? Need a little more in-depth discussion about my M&A Video Series: Streamline Your General Ledger? Reach out to me at mcontento@f12.net. Let’s chat.