Seller Diligence Prepration anticipates buyer questions and requests and generates the appropriate responses with supporting documents thus helping to expedite the transaction diligence process.
This service benefits sellers by:
- discovering and mitigating potential sale negotiation contention points
- identifying and producing or correcting incomplete or erroneous supporting financial schedules
- produce a "sale package" of reports and schedules expected by SMB purchasers that are complete and fully supported from transactional and other data sources
Components offered include:
- Accrual-basis financial statement synthesis - for cash basis businesses an equivalent set of accrual basis financials will be created with fully supported detailed cash-to-accrual adjustments and accounts reconciliations. Accrual basis financials are generally a market expectation.
- Reconciliation of financials to bank statements and tax returns - all business is ultimately cash; seller's bank statements are the most reliable independent basis for verifying SMB financials; KB will produce a reconciliation of transactions per the seller's bank statements to the financial statements (also known as a "Proof of Cash")
- Account reconciliation of key balance sheet items - account reconciliations supporting key balance sheet amounts are crucial to buyer's assurance and valuation of the business. KB will produce the recons if not previously available or refine existing as necessary.
- Seller Quality of Earnings ("QoE") - similar to a buyer QoE, this analysis will calculate the true "run rate" performance of the business, adjusting historical financials for non-recurring and extraordinary income and expenses not expected to re-occur post-sale; this report is useful to the seller for setting a reasonable valuation target range and supporting it during the sale negotiation
- Gross Profit / Unit Economics analysis - product / service unit economics are the driver of valuation for an SMB; KB will analyze profitability by product / service, customer, and geography trended over recent history (most recent 3 years); unit economics trended over time give a clear indication of the capability of the business' products, operating model and personnel. Insight into the market dynamics for the business's products is an added benefit of this analysis.