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Is Your Financial Information “Transaction Ready”?

If you plan to DO NOTHING with your printing and graphics communications business during the next 3 years, stop reading. But this blog post is for you if you are one of the many owners who may engage in one or  more of the following types of corporate transactions by December 31, 2014:

  1. bank financing for line of credit
  2. equipment financing
  3. real estate expansion
  4. merger or acquisition
  5. sale of business to strategic buyer or entrepreneur
  6. private equity or ESOP
  7. succession planning gifting of shares

The date is relevant because many corporate transactions involve 3 years of financial statements and right now is when a lot of companies are putting together their 2012 information.

The question is: when you are ready to seriously consider a critical corporate transaction, will your financial statements by ready to effectively communicate your story? More importantly, what steps can you take NOW to be sure your house will be in order when the financials go under the microscope?

At NAPL, we suggest that owners and senior managers step back from the usual process of preparing year-end financial statements and assess the extent to which their financial information presents the company in the best light possible.

Here are 3 questions to ask your team (and yourself):

  • What conclusions would be reached when you present year over year sales and EBITDA comparisons including documenting adjustments related to owners’ compensation, affiliate transactions, and one-time items?
  • Are the financial statements prepared by a reputable CPA firm using “review” or “audit”-quality standards complete with footnotes?
  • What is the company’s break-even point and what observations can be made based on tracking projected vs. acutal results each month?

Remember, a skeptical CFO-level analyst must be able to quickly construct an accurate cash flow model using your information. It’s in your best interest to be sure your financial information is “Transaction Ready” before you open the door to a corporate transaction.

Feel free to contact me or my NAPL colleague Tim Fischer, our resident subject matter expert on financial management issues, to request a confidential evaluation of your transaction readiness.

cash flow model, CFO-level analyst, communications companies, corporate trasaction, financing, , , owners of printing and graphics, , , Tim Fischer

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