Know Your Numbers, Know Your Worth
When it comes time to sell your business, the numbers tell the story. And if that story isn’t clear, consistent, and trustworthy, it could seriously hurt your chances of a successful exit.
On a recent episode of Mergers, She Wrote, host Paloma Goggins sat down with Louise Hipperson, founder of Finance Agency, to unpack what financial integrity really means—and why it matters so much when you're preparing to sell.
One of the biggest takeaways? Trust in your numbers starts with you knowing your numbers. Buyers don’t just want a snapshot of profits. They’re looking at three years of financial data to see patterns, trends, and whether the business runs smoothly over time. If you can’t confidently walk them through your books and explain what’s happening and why, they’ll start questioning everything—including your asking price.
Louise breaks financial preparation into two pieces: data preparation and data review. That means making sure your books are clean and consistent, and that you’re not just recording the numbers but actually looking at them regularly. If you don’t understand your own financial story, how can you expect a buyer to?
She also shares two mindsets every business owner should adopt, regardless of whether a sale is on the horizon: operate like you’ll be audited tomorrow, and act like you’re selling tomorrow. Not only does this keep your finances in order, but it also helps you run a stronger, more profitable business.
Another key distinction that comes up is cash vs. accrual accounting. Most small businesses operate on a cash basis for tax reasons, but when it comes to understanding how your business is really performing, accrual accounting often paints a more accurate picture. This is especially important when you're talking about things like receivables, which can create confusion if they aren't properly accounted for.
Inventory is another area where missteps can cost you. Let’s say your books show a million dollars in inventory—that sounds great on paper. But if it’s old, unsellable, or hasn’t moved in a year, buyers are going to question the value. Accurate tracking and realistic valuations build trust and help prevent surprises during negotiations.
If your financials have been messy in the past, don’t panic. Louise recommends focusing on cleaning up your data from today forward. But if you’re actively preparing for a sale, working with a financial pro to standardize your reports over the last few years can make a big difference. Consistency helps buyers see the real story—one that makes them more confident in your business.
The episode also dives into the topic of add-backs—those personal or one-time expenses that aren’t essential to business operations. While these can help show higher profitability, too many add-backs can make a buyer nervous. The key is transparency and ensuring that what you present as profit is sustainable.
Finally, if your business is growing, financial forecasting becomes essential. Before you bring on new team members or take on bigger commitments, you need to understand the long-term financial impact. Forecasts help you make decisions based on data—not just gut feeling.
At the end of the day, whether you’re running a solo operation or managing a full team, keeping your financials clean and organized is one of the smartest investments you can make. Because when it’s time to sell, your numbers will speak for you. Make sure they tell a story worth buying.
