When scaling your business with a future sale in mind, how you prepare your financial statements can have a major impact on your eventual exit. One of the key decisions you’ll face is whether to conduct an audit or opt for a financial review. Each type of due diligence when selling your business provides a different level of assurance to potential buyers – but which one is right for your business? And what impact will your decision have on your sale outcome?
Understand what buyers want
Potential buyers are investing in your business’s future performance – not just its present-day profits. They want to feel confident that what they see in your financials reflects the real picture: profitability, sustainability, and low risk. They want to be sure that they are getting exactly what they think they are buying.
They’ll conduct thorough due diligence before making an offer. This includes reviewing financial statements, operational processes, customer relationships, and the strength of your leadership team. A key red flag that can quickly erode trust and put any sale at risk? Overpromising future performance and having to walk back your projections.
Why conduct your own due diligence when selling your business?
While buyer-led due diligence is inevitable, conducting your own due diligence before going to market can significantly strengthen your hand. A six-month head start gives you time to:
- Identify and address financial or operational issues
- Spotlight the strengths of your business
- Align your management team behind a realistic, credible growth plan
This level of preparation boosts credibility and confidence – key drivers of a strong valuation and smooth sales process.
3 key benefits of pre-sale audit or financial review
1. Increase the value of your business
Addressing financial inefficiencies, improving compliance, and streamlining operations can make your business more attractive to buyers—potentially leading to higher offers.
2. Build buyer confidence
Accurate, transparent financial reporting shows that your business is well-managed and low risk. It positions you as a seller who takes the process seriously.
3. Shorten the sale timeline
Well-organised financials speed up the due diligence process and reduce the risk of last-minute issues derailing the deal.
The role of a fractional finance director in preparing your finances for sale
Engaging a Fractional Finance Director (FFD) ahead of a sale can be a game-changer. Unlike a traditional accountant focused on historic data and compliance, an FFD takes a strategic, forward-looking approach.
They can help you:
- Create robust and realistic financial projections
- Strengthen internal financial controls to reduce risk
- Improve financial reporting systems for better decision-making
- Support your management team in aligning strategy and numbers
Their focus is not just on getting your books in order – it’s on getting your business in shape for a high-value sale.
Audit or Financial Review: what’s the difference?
An audit provides the highest level of assurance, with external auditors examining your financials and testing controls in depth. It offers credibility and peace of mind for buyers but comes with higher costs and time commitments.
A review offers a more limited check – primarily focused on analytical procedures and inquiries. It’s faster and less expensive but provides a lower level of assurance.
The right choice of audit or financial review when selling your business depends on:
- The size and complexity of your business
- Buyer expectations in your industry
- Your timeline and budget
- The level of confidence you want to convey
A trusted and experienced FFD can guide you through this decision, helping you weigh the trade-offs and align with buyer expectations in your industry and the current climate.
Confidence Drives Value
Whichever route you take – audit or review – preparing thoroughly is key. With a Fractional Finance Director leading your financial readiness, you can increase buyer confidence, reduce risk, and ultimately sell your business for the best possible price.
Thinking of selling your business? Don’t wait until buyers are knocking – start your due diligence now, and set your business up for a smoother, more successful exit.
As your first step, why not get in touch to find out how one of our FFDs could help plan and undertake due diligence when selling your business.
Or watch our webinar “Built to Scale, Ready to Exit: Finance Know-How for Founders” to learn more about how to set your business up for a great sale.