Lack of proper books/accounting software a deal killer?

April 22, 2026

by a searcher in Trabuco Canyon, CA, USA

If you buy a business that is still running entirely on excel, is that a 'red flag' or an efficiency goldmine? Looking at a business that seems great, but concerned on lack of actual accounting software/books <$500k EBITDA

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Reply by an intermediary
from Babson College in Boston, MA, USA

It’s not an immediate red flag. A platform I’ve been supporting completed a $30m deal where they were doing bank reconciliations in Wuicken and that’s it. Most small business owners run their business on the cash basis so if cash is coming in business is good. They trust their intuition which is generally spot on if they’ve been in business for 10+yrs. You’ll just want to (1) reconstruct financials for deal purposes based on the bank activity and (2) immediately stand up proper accounting day 1 post close if deal gos thru. On point 2, a business buyer will not have the same intuition that the seller has run the business so you need business information to navigate decision making. And during transition periods post close, the sellers intuition becomes impaired once getting the sales proceeds in his bank account.

Reply by a professional
from Biola University in Escondido, CA, USA

I agree with ^redacted‌ and ^redacted‌. It depends on the sophistication of the buyer. I would go out on a limb and say I have seen some spreadsheet better organized and well prepared than sellers with QBO or equivalent software.

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