M&A Advisor Tip: Drive Cash to the Bottom Line
We all like to save money on our taxes. But hiding personal expenses in your tax return can do more harm than good. Most businesses are purchased as a multiple of cash flow (roughly EBITDA less capital expenditure needs, less increases in working capital as the company grows). If buyers and lenders can’t find your personal expenses in the financials or if the adjustments are so severe they border on tax evasion, they’ll be suspicious and possibly scared off.
It’s in your best interest to drive cash to the bottom line in the last 2-3 years before a sale.
Take a hit on taxes for a few years to get a much larger return when the company sells.
For further information on this topic or to discuss a potential business sale, contact Al Statz, 707-781-8580 or email@example.com.