Keep books a buyer can check, starting years before a sale. Start two to three years ahead with reconciled monthly books, clean separation from your personal spending and records that tie to your bank.
What a buyer will check
Expect a buyer, or their CPA, to compare your P&L with your bank statements and tax returns, and your membership revenue with your platform's reports. Anything that doesn't tie becomes a question. This post shows what a buyer looks for, from the other side of the table.
Start two to three years out
A buyer may ask for several years of history. I'd want each of those years to have:
- Every bank and card account reconciled monthly.
- Membership revenue on its own line, separate from labs, meds and other services.
- Employer contracts tracked separately, with the agreements on file.
- A Balance Sheet with no unexplained old balances.
Separate your personal costs now
Personal costs run through the practice make profit look lower than it is. You can explain them to a buyer as add-backs, but keep proof for every one.
In a made-up example, $9,000 a year of personal car and phone costs runs through the practice. If you can't document it, a buyer may leave it in as an expense, and you lose the value of that profit in the price.
Gather what a buyer will ask for
- Monthly P&Ls and Balance Sheets for the last three years.
- Tax returns for the same years.
- Member counts by month, and churn.
- Leases, loans, employer contracts and equipment lists.
- Payroll records and staff agreements.
Bring in the right people
Your attorney handles the sale agreement and your CPA handles the tax side of the sale. Both are easier to work with when your books are clean. If a sale is part of your retirement plan, this post covers the bigger picture.
Show steady numbers
A year with a big one-time cost, a missing month of books or a jump in owner pay should come with a short written explanation. Keep notes as these things happen, not years later when nobody remembers why.
What I'd do this week
- Check how far back your books are reconciled.
- Move any personal costs off the practice accounts.
- Start a folder with leases, contracts and loan papers.
- Ask your CPA how a sale would be taxed in your setup.
Common questions
How is a practice priced?
A broker or your CPA can explain the methods used for practices like yours.
Can I clean up the books right before a sale?
You can fix records, but years of consistent books are easier for a buyer to check. Start early.
Do I need audited statements?
Ask your CPA and the buyer what they expect. A buyer may ask for a review by their own CPA. Clean books make that faster.
Want books that hold up when a buyer looks?
We reconcile every account every month and send your P&L and Balance Sheet by the 15th, so decisions like this start from real numbers. If that's what you need, apply to work with us.