When the owner starts selling a business, for the buyer it is an opportunity to open his new business, and here it is necessary to be extremely careful. It is very important to thoroughly study the following documentation: firstly, the business plan, that is, the company's development strategy for the future, and secondly, international or management financial statements (covering the last two or three reporting periods).
Of course, everything stated in the plans must correspond to the actual state of affairs. That is, the indicators must be based on general analytical data (with matching adjustments) and cover a single consolidation perimeter (if the business being sold includes several companies).
However, in reality, these requirements are not always met. For example, a businessman acquired a Russian media holding and only six months later discovered that the data on the company's activities did not correspond to reality. Initially, the budget included a certain number of legal entities in the consolidation perimeter, but in reality there were three more.
Or another example: the taiwan email list planning department calculated the expenses for capital repairs as part of the investment budget, and the accounting department attributed it to operating expenses. Of course, the data that was reflected in the plan-fact analysis lost all meaning. It is clear that no one intended to deliberately cause confusion. The reason here is that normal interaction has not been established between the accounting department (its task is to maintain reporting according to RAS/IFRS) and the financial and economic department (which forms the budget).
How to solve such problems? To implement unification of analytics and rules for distributing business transactions by various items. All calculations should be carried out on a single consolidation perimeter, and when forming reports, adhere to a common policy regarding planned and actually achieved indicators.
Overly embellished business plans
Overly embellished business plans
This is a fairly common situation when an owner, having decided to sell a business, demonstrates to a potential buyer an overly optimistic business plan that does not correspond with the actual indicators.
Why is this done? The goal is clear: to sell at a higher price. And to do this, it is necessary to show that the business is about to start making crazy money. The buyer, for his part, wants to minimize the risks and uses a technique called "deferred compensation."
This term refers to a certain part of the company's value that the seller receives not immediately, but only after the company begins to bring the promised income to the new owner (this may be in a year or later). Some buyers even put forward the following condition: until the promised reward is paid, the former owner of the company continues to work in it (if previously the decision on management issues lay with him).