Preparing Your Business for an Exit: A Financial Checklist

Exiting is not just about choosing a broker or a pathway and hoping for the best.  As with all things in business, a clear robust plan and allowing plenty of time to execute the plan will undoubtedly lead to a much better outcome.  As the saying goes, “most people aim at nothing, then hit it with incredible accuracy”.  

Therefore, if you're planning to sell your business, merge with another company, or transition ownership to a successor, don’t rely on hope as a strategy.  Preparing for an exit is one of the most critical phases in a business owner's journey. A well-prepared exit not only maximizes value but also ensures a smoother transition for stakeholders, employees, and customers. At the heart of this preparation lies a robust financial checklist.

At Andersen’s we run a comprehensive 21 Step Process to assist business owners through this transition, but here is a summarised guide to help you get your financial house in order before you exit.

1. Get Your Financial Statements in Order

Buyers and investors want transparency. That starts with clean, accurate, and up-to-date financial statements. At a minimum, ensure you have:

• A minimum of five years of financial statements (Profit & Loss, Balance Sheet, and Cash Flow statement)
• Tax Returns that align with your financials
• Reconciled accounts with no unexplained discrepancies

Consider having your financials audited if you are a larger enterprise (valuation of $30m upwards) or alternatively reviewed by a third-party accountant. An independent review adds credibility and can increase buyer confidence.  At a minimum you might just find out about some skeletons in the closet nice and early which gives you time to sort things out prior to someone else poking around and discovering things under Due Diligence.

2. Normalise Earnings

Your business may have one-off expenses, owner perks, or non-recurring revenues that distort the true profitability. Normalising earnings means adjusting your financials to reflect the business’s actual earning power, and likely indicative earnings going forward.

Common adjustments include:

• Shareholder’s salary to be adjusted to market
• Discretionary expenses
• Non-recurring legal or consulting fees
• One-time gains or losses
• Market rental if you or a related party own the business premises
• Subsidies eg COVID-19 payments

These adjustments help calculate EBITDA (Earnings Before Interest, Tax, Depreciation, and Amortisation) — a key metric used in business valuation.

3. Understand Your Valuation Drivers

Every industry has different valuation benchmarks, but some universal factors influence how much your business is worth:

• Revenue and profit trends
• Customer concentration (Are you overly reliant on a few clients?)
• Recurring revenue models
• Scalability and growth potential
• Strength of management team and systems
• Supplier Contracts and Terms
• Assignability of Contracts
• Key Staff and retention strategies

Engaging a professional valuation expert early can help you understand your business’s worth and identify areas to improve before going to market.  We strongly recommend and independent indicative valuation be completed, which not only will give you a price range, but will identify areas where valuation can be improved.

4. Clean Up the Balance Sheet

A cluttered or overly complex balance sheet can raise red flags. Take time to:

• Write off bad debts
• Dispose of obsolete inventory
• Reconcile intercompany loans or shareholder advances
• Ensure fixed assets are accurately recorded and depreciated
• Review Working Capital, and calculate Net Working Capital over a period of time

A lean, transparent balance sheet makes your business more attractive and easier to evaluate.

5. Review Contracts and Legal Obligations

Financial due diligence often uncovers issues in contracts that can delay or derail a deal.

Consider things such as:

• Customer and supplier agreements
• Lease obligations
• Loan covenants
• Employment contracts and benefits
• Industry Groups, subscriptions, memberships

Ensure all agreements are documented, up to date, and transferable where necessary. If you rely heavily on key contracts, be prepared to show their longevity and renewal terms.

6. Prepare a Forecast and Business Plan

Buyers want to know not just where your business has been, but where it’s going. A well-supported financial forecast demonstrates:

• Revenue and profit projections
• Assumptions behind growth
• Capital expenditure needs
• Working capital requirements

Pair this with a strategic business plan that outlines market opportunities, competitive advantages, and operational improvements.

7. Organise Your Financial Documentation

Due diligence is document-heavy. Having your financial and operational documents organised and readily accessible can speed up the process and build trust.

Key documents include:

• Historical financials and tax returns
• Bank statements and loan documents
• Payroll records
• Insurance policies
• Capital Structure and Table if it’s a share sale including Available Subscribed Capital
• Statutory documents and minutes, including directors interests register and board minutes

Consider setting up a secure data room to manage access and track document sharing.

8. Address Tax Implications Early

The structure of your exit — asset sale vs. share sale, for example — can have significant tax consequences.

Work with a tax advisor to:

• Understand your personal and corporate tax exposure
• Explore tax-efficient deal structures
• Consider Dividends and utilization of Imputation Credits
• Plan for tax implications, depreciation recovered, dividend withholding tax etc.

Early planning can help you retain more of the proceeds from your exit.

9. Strengthen Internal Controls and Systems

Buyers want to see that your business can run without you. Strengthen your internal controls, automate processes where possible, and document key workflows. This not only improves operational efficiency but also reduces perceived risk.

10. Assemble Your Exit Team

Exiting a business is complex. Surround yourself with experienced advisors, including:

• An experienced corporate finance accountant – generally a specialist and not your general practitioner
• A business broker or M&A advisor
• A commercial lawyer
• A tax specialist
• A financial planner (for post-exit wealth management)

Having the right team ensures you’re well-represented and protected throughout the process.

Final Thoughts

Preparing your business for an exit isn’t just about maximising value — it’s about creating a legacy and ensuring continuity. By following this financial checklist, you’ll be in a strong position to negotiate confidently, avoid surprises (especially “price chipping”), and achieve the outcome you envision.

Whether your exit is imminent or still a few years away, the time to start preparing is now.

Andersen have the team you need for this next step in your business - reach out to our team today.