The Importance of Recasting Financial Statements

[Stacy L. Alario, FCBI]

As a business owner, and possibly part of the baby boomer generation, you have seen your share of ups and downs in the business world.

If you are considering the sale of your business there are trained, professional business brokers and mergers and acquisition specialists available to offer assistance and guidance to help you determine the value of your business and how the market might respond. More importantly, use a Certified Business Intermediary or C.B.I.

Most businesses track their financial performance by using balance sheets, profit and loss statements and tax returns. These reports are beneficial when recasting in determining the "true" earnings and market value of a business. They also may determine the “health” of the business. In most instances it is the cash flow that prospective buyers need to know to better understand if the business meets their income needs. They must also understand how the money is being spent and the available opportunities to generate positive cash flow in the future and pay any resulting debt service in the purchase.

The process of accurately recasting financial statements is essential in determining the value of a business when the owner’s intentions are to sell. Recasting requires extensive investigation to ensure all relevant and appropriate adjustments are correctly reported. This is one of many services provided by a trained C.B.I., professional business broker or mergers and acquisition specialist.

They will examine your financial's along with the historical performance of the business, and endeavor to identify keys to future performance and market opportunities. The recasting process identifies items such as excessive and discretionary expenses and nonrecurring revenues and expenses. Recasting provides an economic view of the company, and allows meaningful comparisons with other investment opportunities.

Adjustments such as owner benefits (salary, commissions, perks, incentives, personal loans and discretionary expenses) are considered and added back into the value of the company. The result enables a potential buyer to adequately assess the business, its cash flow and future earning capacity.

A great deal goes into the process of determining value and selling a business. Recasting the financial statements of a business provides an indication of the business value and helps an owner with accurate expectations. This also helps to SELL the business for a buyer gets a clearer picture of the true benefits and value in ownership.

A trained C.B.I., professional business broker or mergers and acquisition specialist will help you understand the financial statements and help you move forward toward the completion of the business sale.

American Business Brokerage and Stacy L. Alario, FCBI have been assisting business owners in the sale of the business for over thirty years.

For a confidential meeting to discuss your exit planning strategy, please call or email American Business Brokerage and

Stacy Alario,FCBI - Certified Business Intermediary and Fellow of the International Business Brokers Association

[phone] [e-mail]

American Business Brokerage

...we sell businesses confidentially.

http://www.americanbusinessbrokerage.org