Fix your financial records first. When you sell, the buyer runs a due diligence process that includes a quality of earnings study, and every question you cannot answer with documentation costs you either purchase price or the deal itself. Getting to books an accountant can stand behind is the highest-return preparation work available to most owners, and it takes longer than the timeline of an actual sale allows.
Marcus Mire, CPA and founder of MireGroup CPAs, took this question on Mailbag Wednesday after hearing the same answer twice in one week. His C12 group watched a video of a business broker being asked what matters most when preparing to sell. Then a broker showed up in person and said the same thing. The answer in the video came in three parts.
"Clean financials, clean financials, clean financials."
Why do brokers say it three times?
Because the cost of getting it wrong shows up in dollars at closing, and Marcus has watched it happen.
"When you’re trying to sell your business, if you don’t have accurate or what they would call clean financial information, you can lose so much value and or lose a deal trying to sell your business."
Owners tend to assume the value of the business lives in the business: the revenue, the customer list, the team, the equipment. All of that is real. But the buyer can only pay for what the buyer can verify, and verification runs entirely through your records.
What happens during the due diligence phase?
Once you have a buyer, you enter due diligence. Depending on the size of the deal, the buyer brings in professionals whose job is to confirm that your financial data holds up. They run a quality of earnings study along with a range of other diligence work.
Then the questions start.
"They will dig in and ask you questions you never thought you’d have to answer about transactions four years ago. Sales tax you may or may not have filed in one state, registrations in another."
None of that is hostile. It is the process working the way it is designed to work. But it assumes you can produce answers, and the answers have to come from records that already exist. You cannot build them during diligence.
What do clean financials actually look like?
Marcus gives a working definition that is easy to test yourself against: an accountant can stand behind your financials.
In practice that means more than the office manager reconciling the bank account. It means someone who understands the balance sheet, and better yet understands debits and credits, reviews your balance sheet and your profit and loss statement and can tie out the accounts. The amounts are reasonable. They tie to third party data. And the work happens accurately and on a timely basis rather than in a scramble.
If your monthly close consists of matching the bank statement and calling it done, you do not have this yet.
What if you don’t know whether your books are good?
Most owners do not, and Marcus does not treat that as a failing.
"People don’t understand what good looks like. It’s like I wouldn’t know what a good oil change looks like. I have to tell a third party that’s an expert, tell me."
His actual advice, given to the friend sitting next to him when the question came up, was to get a CPA or an accountant to look over what the in-house person is doing and bless it, or adjust it and confirm the balance sheet is right now. You are buying an outside opinion on work you are not equipped to evaluate yourself. That is a normal thing to buy.
Why doubt costs you money at the table
The damage compounds, and that is the part owners underestimate.
"Every time you do something in your business from a financial perspective that delegitimizes yourself, it opens you up to more questions."
Anyone who has been in the room knows how this goes. You are sitting across the table, a question comes, and you cannot answer it. The gap produces three more questions. More questions produce doubt about everything else you have presented, and doubt gets priced in. It comes off the number.
When should you start?
Before you have a buyer. You cannot reconstruct four years of records while a diligence team is waiting on you, and any cleanup done under that pressure looks exactly like what it is.
If selling is anywhere on your horizon, even several years out, the work starts with accurate monthly closes, a real balance sheet review by someone qualified to do it, and filings current in every state where you have exposure. That is ordinary operating discipline, and it happens to be the same discipline that makes a business easier to run in the meantime.
We would love to help. See our plans and pricing at mire.group/accounting-and-tax-plans, or reach out at mire.group/work-with-us.
Frequently asked questions
What do clean financials look like?
Financials an accountant can stand behind. Someone who understands the balance sheet reviews your balance sheet and profit and loss statement, ties out the accounts, confirms the amounts are reasonable, and checks that they agree with third party data. It is done accurately, and it is done on schedule rather than at year end.
What is a quality of earnings study?
It is an analysis a buyer commissions during due diligence to test whether your reported earnings reflect the actual, sustainable economics of the business. It looks for one-time items, owner expenses running through the company, timing issues, and anything else that would make the profit picture look better than it is. The result often becomes the basis for the final price.
My bookkeeper reconciles everything every month. Is that enough?
Usually not on its own. Reconciling the bank account and paying the bills are necessary, but they are different from someone reviewing the balance sheet and confirming the accounts tie out. Marcus’s recommendation is to have a CPA or accountant review the in-house work periodically and either confirm it or correct it.
How far in advance should I start cleaning things up?
Earlier than feels necessary. Buyers commonly look back three to five years, so records from years you have already closed will be examined. If you are thinking about a sale in the next few years, the work should already be underway.
Do I need audited financial statements to sell my business?
Not usually for a smaller transaction, though it depends on the buyer and the size of the deal. What matters more in most cases is that your records are accurate and defensible, and that a qualified accountant has reviewed them. Some buyers will ask for a review or an audit, and having clean books first makes either one far less painful.
Mire Group Marketing: Sep 7, 2026, 7:00:00 AM
