Searchers- under LOI reminder to ensure you’re analyzing closed financials.

April 18, 2024

by a professional from James Madison University in Washington, DC, USA

Searchers! My annual reminder to ensure you’re analyzing closed financials.

Active SMB buyers under LOI

➡️If the owner or seller tells you the 2023 numbers aren’t closed yet…

➡️You need to pause everything and ask them to close the books.

➡️It’s 4 months into 2024 and they need to prioritize this.

➡️You cannot analyze a company without closed books, especially SMBs who often make all adjustments at year-end.

➡️These year-end adjustments could materially move net profit by 20-30%.

➡️If you are paying a 3X multiple, this can easily cost you >$500k.