Seven things a buyer's accountant finds first.

Our managing advisor spent fifteen years examining businesses for the IRS. The buyer's accountant reads your company the same way, from the bank statements up, and they trust the paper over the story. Most owners meet that person for the first time in diligence, after the price has been agreed in the letter of intent. That is the worst possible time, because everything they find becomes a reason to pay less, and you have already stopped talking to the other buyers.

The list below is the one we hand to CPAs and attorneys who refer owners to us. None of it is exotic. All of it is fixable, and most of it is fixable by your own people, if you start before a buyer is in the building.

1. Cash-basis books with no monthly close

How they find it. They ask for three years of financial statements and the tax returns, then they tie one to the other. If the books are on a cash basis, revenue moves with when checks were deposited rather than when work was done, and the months don't reconcile. If there is no monthly close, December's numbers were still moving in March. The accountant builds a proof of cash, matching every deposit to the general ledger, and the gaps show up in an afternoon.

What it costs. A price chip in diligence, commonly 5 to 10 percent. The buyer isn't accusing you of anything. They simply can't verify the earnings, so they pay for the earnings they can verify.

The fix and the time. Move to accrual accounting and close the books every month, with a bank reconciliation and a review of receivables and payables. Sixty to ninety days to get current, then a discipline your bookkeeper keeps. This is the first item on most fix lists because it makes every other item easier to prove.

2. Owner-dependent sales

How they find it. They ask who quotes the work, who the top ten customers call when something goes wrong, and who signed the last five contracts. Then they check the answer against the CRM, if there is one, and against the email traffic if there isn't. When every road leads to your desk, they know it before the management meeting.

What it costs. Roughly half a turn of the multiple. On a business earning $600,000 a year, that is $300,000 off the price, because the buyer is underwriting the risk that the top line walks out with you.

The fix and the time. Put a second person in front of every major account, in writing and in the room. A sales manager, an estimator, a service lead, whoever the customer will accept. Six to twelve months, because the relationship has to survive at least one renewal without you carrying it.

3. Customer concentration

How they find it. Revenue by customer, by year, for three years. This is one of the first schedules requested and one of the easiest to run. Any account over 20 percent of revenue gets its own line in the diligence memo, along with the contract terms, the renewal date, and the name of the buyer's contact there.

What it costs. An earn-out or a holdback instead of cash at close. The buyer still pays the price, on paper, but a slice of it now depends on that customer staying for two or three years after you have left, which is a bet you no longer control.

The fix and the time. Grow the rest of the book so the big account falls under 20 percent, or lock it into a multi-year contract with assignment language a buyer can rely on. Twelve months or more. This is the slowest item on the list, and the one that most rewards starting early.

4. Undocumented add-backs

How they find it. Every broker's package lists add-backs: the owner's salary above market, the family car, the trip that was half business, the one-time legal bill. The accountant asks for the schedule behind each one and a receipt or ledger entry that supports it. Add-backs with no schedule get tested line by line, and anything that cannot be traced to a document gets struck.

What it costs. Buyers discount what they cannot verify. Every struck add-back comes straight off SDE, and the multiple is applied to the smaller number. A $40,000 add-back that fails at a 3x multiple is $120,000 off the price.

The fix and the time. Thirty days. Build a schedule with each item, the amount by year, the ledger account, and the supporting document. This is the highest-return month of work in the entire preparation, which is why it is the first thing we do in the Exit-Readiness Review.

5. No written SOPs

How they find it. They ask for the operations manual, the onboarding checklist, the quality process, and the list of who is authorized to approve what. Then they walk the floor and ask a foreman how a job moves from quote to invoice. If the answer is "ask the owner," the company runs on memory, and the buyer's accountant writes that down.

What it costs. Buyers price in the risk of the owner leaving. It shows up as a lower multiple, a longer transition period you are expected to work for free, or both.

The fix and the time. Three to six months. Not a binder for its own sake, but written procedures for the twenty things that actually happen every week, plus delegated authority so decisions get made when you are not there. Genevieve Andres, a former COO, runs this part of our engagements, and most of the writing is done by your own people.

6. Working capital that swings

How they find it. They pull the balance sheet for the last twelve to twenty-four months and chart receivables, inventory and payables. If working capital moves by hundreds of thousands between seasons, or the owner drains it before year-end to manage taxes, the accountant will propose a "normal" level, and it will be the level that favors the buyer.

What it costs. A surprise deduction at close, often six figures. Most purchase agreements require you to deliver a target amount of working capital. If no target was set before the LOI, the buyer sets it during diligence, and the shortfall comes out of your proceeds.

The fix and the time. Sixty days. Calculate a trailing twelve-month average, agree on what counts, and put the target in the LOI before you sign it. Alex Nejad, CPA, does this on every sale we run. It is the single cheapest six-figure fix on the list.

7. Deferred maintenance and lapsed compliance

How they find it. The fixed-asset register against a walk through the shop. The lease against its renewal date. Licenses, permits, and whether the sales-tax registrations match the states you actually ship to. Environmental and safety filings for a manufacturer. It is a checklist, and they run all of it.

What it costs. Escrow holdbacks. The buyer doesn't refuse to close; they hold part of the price in escrow until the equipment is replaced, the lease is extended, or the tax exposure is resolved. Money you thought was yours sits with a third party for a year or two.

The fix and the time. It varies. A lapsed license is a week. A lease extension is a negotiation. A machine that should have been replaced two years ago is a capital decision, and sometimes the right answer is to price it into the deal rather than fund it yourself. What matters is that you know the list before the buyer does.

Where to start

If you want to know which of the seven applies to you and roughly what it is costing, the free confidential value range comes with the two or three items a buyer's accountant would raise first, within two business days. If you want the gaps priced and a plan to close them, the Exit-Readiness Review is two weeks and $4,500, credited against our fee if we later sell the business. And if you are wondering what the fixes are worth in dollars, what Chicagoland businesses actually sell for is the companion piece to this one.