How Do I Prepare My Business for Growth or Sale?
By Will Abberger, Enrolled Agent, former construction CFO · Published August 5, 2026Different people and organizations will evaluate your business differently. For some potential acquirers, purchasing your company may be a new venture (an individual investor). For others, it may be part of a long-term strategic plan (an industry consolidator). Different people will come to different conclusions on a fair "sale price."
What is constant is financial performance. Every potential acquirer will ask for three years of financial statements — Balance Sheets, Profit and Loss Statements, and possibly other subsidiary schedules including aged receivables, aged payables and work-in-process.
Balance Sheet: What Investors Are Really Asking
Potential investors want to examine your capital structure. They want answers to fundamental questions:
- Are we properly capitalized — what's our working capital turnover?
- Are we properly leveraged — what's our debt/equity ratio?
- Are we effective in collections — what's our average age of accounts receivable?
- Do we pay our bills in a timely manner — what's our average age of accounts payable?
- How reliable are our fixed assets — what's our degree of fixed asset newness?
Real client pattern — Will's experience
I worked for an industry consolidator. My assignment was to find potential HVAC, Electrical and Plumbing contractors for acquisition, from making initial contact through closing. The company's valuation calculations included making allowances for replacing service trucks — their operating assumption was that service trucks need to be replaced every six years. Acquisition targets with older fleets were deemed to have greater post-closing investment requirements, and the company adjusted their offer accordingly.
Profit & Loss: Your Operating Effectiveness
Potential investors want to see your operating effectiveness:
- Revenue trend — are revenues increasing, decreasing, or remaining constant over time?
- Margins — how do they compare to industry standards? If you're a trades contractor, you'll need departmentalized financial statements to answer this. For example, an Air Conditioning contractor performing T&M Service, System Replacements and New Construction needs departmentalized statements identifying the gross margin of each service — margins will identify any potential pricing, productivity or purchasing issues for the potential acquirer.
- Overhead spending — Marketing & Advertising (cost for new customer acquisition versus average job size and lifetime revenue per customer), Insurance (are we adequately insured?), Staff (organizational structure, capacity for expansion, compensation versus market norms), and Repairs & Maintenance (fleet spending and what it says about fleet effectiveness).
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