"A straightforward request - except that this information existed in three different systems - Salesforce, QuickBooks and Excel spreadsheets. It took us six weeks to gather the information, and after we provided it to the buyer, the differences in the various systems had generated enough mistrust of the company's financial reporting that the buyer lowered its offer by $8 million, which equated to about one full EBITDA multiple of what the business was worth."
"72% of businesses do not have access to reliable and consistent data and KPIs needed to support exit readiness. Buyers cannot risk losing their confidence in a seller's numbers. If they cannot believe the numbers, they will decrease the purchase price. If they need to spend extra weeks reconciling the seller's financial reporting, the deal momentum will cease. If a seller's financial reporting function is dependent upon the founder, buyers will perceive a high degree of execution risk."
Unreliable and inconsistent financial data across multiple systems can destroy buyer confidence and reduce purchase price, as mismatches force long reconciliations and signal poor reporting. Data fragmentation and delays in assembling reports can lead to substantive valuation reductions, exemplified by an $8 million decrease equating to one EBITDA multiple. Seventy-two percent of businesses lack reliable, consistent data and KPIs needed for exit readiness. Buyer skepticism prompts lower offers and halts deal momentum if reconciling takes weeks. Founder-dependent finance functions increase perceived execution risk. Exit-ready companies produce management reports within days, maintain consistent KPIs for three years, and keep working capital clean.
Read at Entrepreneur
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