we get down towards the end and due diligence fails as a Buyer realises they cannot prove the cash flow...and we generally all conclude we have wasted several months and a Buyer should come back in 12 months while the Seller cleans up his books and records. So what do we mean by good books and records? The following are the things we need for a good financial pack. They need to be accurate and up to date and provable in due diligence: 1. Filed accounts for the last 3 fiscal years (the un-abbreviated version of what is filed at Companies House) - this should be easy as the accountant produces these for every fiscal year end by law. 2. Management Accounts (Profit and Loss and Balance Sheet) through last month since the last year end (i.e. since the last filed accounts date) - These normally come out of the accounting system (i.e. Sage, Xero, QuickBooks). We do not expect the balance sheets to be accurate as the accountant will not have done any adjustments, but we can compensate for that when we do the recast for the financial pack. 3. Aged debtors and aged creditors (2 different reports) as of the last month - This comes out of the accounting system. Sometimes we need to wait for the bookkeeper to catch up with the last month end which is fine...we will wait. 4. Asset list over £5000 - This is a list of assets in the business with their market values (Seller estimate). This is not the book value with depreciation schedules, although these will be needed in DD. This is to ascertain the value of the assets in the business for valuation and for obtaining commercial lending. 5. Bank statements for the last 3 months - Self-explanatory and should just come right out of the online banking system. 6. VAT statements for the last 4 quarters - this will be available at the HMRC VAT portal.
66
Made with FlippingBook - professional solution for displaying marketing and sales documents online