The software reads what the books hold

What does a buyer rebuild?

What rules do the numbers follow?

• One definition per figure: revenue, EBITDA or working capital are worked out once, and the report, the dashboard and the workbook all read that one result.
• Every figure traced: each figure leads back to the accounts it came from, so a question from the board or a buyer is answered from the books.
• Missing is shown as missing: a dataset that is not there is marked as missing, never filled with a zero.
• Adjustments stand beside the figure: adjusted EBITDA keeps the reported figure next to it, each adjustment with its reason and its evidence.
• The same rules every month: definitions do not change between months or years, so one month compares with the next.

Which accounting habits protect the price?

• Accruals every month, not only at year end: bonuses, holiday and overtime balances, unbilled work and supplier invoices, so an interim month reads like a year end.
• Revenue recognised the same way every month: time and material billed monthly with unbilled work accrued at month end, fixed-price work by a written stage-of-completion policy, deferred revenue on its own account.
• A register of one-offs, kept as they happen: what happened, when, the amount and the evidence. An add-back documented at the time is accepted; one argued years later often is not.
• Owner and company kept apart: the owner's salary at a market rate or documented beside a benchmark, private costs off the books, family members employed with job descriptions, rent and shareholder loans between owner and company on market terms.
• Receivables valued honestly: the allowance for doubtful receivables reviewed against their age every month, not cleaned up before the sale.
• Policies written down and kept: capitalisation, revenue recognition and the chart of accounts stay the same across the years a buyer reads.

How is intercompany set up?

• Receivables and payables on the balance sheet: intercompany receivables and payables in their own balance-sheet accounts, separate from trade receivables and payables, one account per sister company. Each balance then has exactly one counterpart to match.
• Loans apart from bank debt: intercompany loans and their interest in their own accounts, so net debt shows only what the group owes outside it.
• Revenue and costs by what they are to the receiver: staff working on the receiver's billable projects under personnel, bought-in services as external services, recharged rent and administration as operating expenses, a group tax allocation under taxes.
• The same amount in the same month: both companies book each charge in the same month, so the pair nets to zero.

Which items will a buyer treat as debt?

• deferred revenue: work invoiced but not yet delivered
• accrued bonuses and unpaid holiday
• payables overdue or stretched beyond their terms
• income tax on profits up to completion
• leases, and severance or pension provisions where the law requires them

What should not happen in the last year?

• Window dressing: collecting receivables early or paying suppliers late just before signing. The working-capital peg is an average over the last twelve months and overdue payables count as debt, so the move is reversed in the price.
• Late add-backs: adjustments introduced in the final months without evidence are rejected, and they cost credibility for the rest.
• A change of policy or chart of accounts: it breaks the comparison of one year with the next, which is what the buyer reads.
• New arrangements with the owner: a new related-party contract in the year of the sale is read as preparation for the price, not as business.
• Leakage after the reference date: where the price is fixed on a past balance sheet, dividends, management fees or bonuses paid to the sellers after that date are paid back in full.
• Tax groups ended by surprise: a group taxation or a profit-transfer agreement has a minimum term; the sale date has to respect it.

What does a buyer want to see in the company?

• A business that runs without the founder: client relationships held by more than one person, a management team that runs the month, decisions that do not wait for one signature.
• One version of the numbers: the report, the workbook and the board deck state the same figure.
• A forecast with a track record: each month's forecast kept, so its accuracy over time can be shown rather than claimed.
• A data room built as you go: contracts, employment terms, IP and domains held by the company, not the founder, and change-of-control clauses in client contracts found long before signing.
• A vendor due diligence when it pays: in a competitive sale, a report the seller commissions puts the findings on the table before a buyer raises them.

What happens every month?

• The data arrives by a fixed day: each system's export, delivered by the person responsible for it.
• The month is closed: accruals booked, intercompany matched, the balance sheet reconciled.
• One build: the reports, the workbooks and the data room are generated from the closed month.
• One review meeting: what moved, why, and the two or three decisions the numbers ask for. Decisions are minuted and revisited the next month.
• The forecast rolls forward: so a miss shows while the quarter can still be changed.

What does the company keep up itself?

• A chart of accounts kept deliberately: a new account is opened on purpose, not because a booking needs a home.
• Accruals booked every month: so each month carries its own revenue and costs.
• Files delivered on time: in the agreed format, every month, by the person named for it.

How does a company get there?

Where does this come from?

FAQ