Sample report · fictional company
Once a buyer signs a letter of intent, their accountant spends weeks testing your numbers. What buyers worry about most is earnings that look better in the books than in the bank, and surprises at that stage cost sellers money: a lower price, a longer escrow, or a deal that falls apart. DealSwirl runs the same checks on your documents now, while there's still time to fix things.
Proof of cashBank deposits tied to the revenue on your tax returns, year by year.
Quality of earningsWhether your add-backs will hold up, and which ones buyers will push on.
Ten buyer questionsThe questions a buyer will ask you, written from your numbers and ranked by how much they could move the price.
A fictional cabinet maker with three years of tax returns, income statements, a balance sheet and 21 months of bank statements. Every name and number is made up.
3 years of numbers from tax returns (FY2023–FY2025): revenue up 20% to $2.2M, with adjusted earnings of $284K in FY2025. This year so far (January to September 2026): revenue of $1.7M, on pace for about $2.3M (an estimate). Of the 16 checks, 8 look good, 7 are worth a look and 1 is likely to draw hard questions.
| FY2023 | FY2024 | FY2025 | 2026 YTD (9 mo) | |
|---|---|---|---|---|
| Revenue | $1,827,500 | $2,005,200 | $2,197,800 | $1,747,251 |
| Reported EBITDA | $145,100 | $143,678 | $244,343 | $194,253 |
| Add-backs counted | $20,500 | $56,000 | $39,400 | $0 |
| Adjusted EBITDA | $165,600 | $199,678 | $283,743 | $194,253 |
| Seller's discretionary earnings | $305,600 | $349,678 | $443,743 | $321,453 |
The results most likely to come up with a buyer, most serious first.
1. “Equipment repair (one-time)” is counted as one-time in 2023 and 2025
Buyers will question thisThese one-time add-backs appear in more than one year: Equipment repair (one-time) (2023, 2025).
What to do: Remove them, or be ready to show why each year's cost was different and won't continue. Details
2. FY2024 add-backs are 39% of reported earnings
Worth a lookAdd-backs make up a large part of your adjusted earnings. Buyers accept them when each is documented, but they test every one.
What to do: Keep a receipt, statement or invoice for every add-back. Details
3. FY2023 books show $1.7M of revenue; the return shows $1.8M
Worth a lookYour books and returns differ more than buyers expect in FY2023. Some difference is normal (cash vs. accrual accounting, depreciation, year-end entries by your CPA).
What to do: Ask your CPA for a short reconciliation of books to return. Details
4. $210K of debt, 0.7× adjusted earnings; $25,000 owed to owners
Worth a look$210,000 of debt, about 0.7 times adjusted earnings. $25,000 is owed to owners.
What to do: Most sales are cash-free, debt-free: debt is paid from your proceeds at closing. Settle or document owner loans before a sale. Details
5. Bank balance fell to $21,400 in February 2024
Worth a lookThe lowest month-end balance, $21,400 in February 2024, covers about 12% of a typical month's deposits. A thin cushion makes buyers ask how the business handles slow months.
What to do: Build a cash reserve before going to market, and be ready to explain the low points. Details
Written from your numbers and ranked by how much the answer could move the price. Have an answer, and a document, ready for each.
Add-backs of $56,000 are 39% of reported earnings in FY2024. Can you document each one, starting with the largest, Legal settlement - former employee lawsuit ($38,000)?
“Equipment repair (one-time)” is added back as a one-time cost in 2023 and 2025. Why should a buyer treat it as one-time rather than a normal cost of running the business?
Your FY2023 books show $1,715,500 of revenue, but your tax return shows $1,827,500. What adjustments explain the difference?
What is the $25,000 the business owes its owners? Is there a promissory note, and how will it be settled at closing?
From: Debt and owner loans
What share of revenue comes from your largest three to five customers, and are any of them under contract?
Every buyer asks this.
Your bank balance fell to $21,400 at the end of February 2024. How do you cover payroll and bills in tight months, and have you ever used a line of credit or short-term loan to do it?
What are these charges in the business account: Hickory Ridge Country Club, Family phone plan, Streaming subscriptions? Are they business or personal?
Which customers, suppliers and decisions depend on you personally, and how long will you stay on to hand them over?
Every buyer asks this.
Can you show receipts, invoices or statements for Family phone plan ($2,400)?
Can you provide current payoff statements for the $210,000 of loans and lines of credit, and say which are personally guaranteed?
From: Debt and owner loans
At its planned 6% growth, the business can pay its owners about 77% of its earnings and still fund that growth from its own cash (it has no bank debt now), without outside money.
| Paid to owners | Growth it can fund itself |
|---|---|
| 100% of earnings | 0% a year |
| 75% of earnings | 7% a year |
| 50% of earnings | 14% a year |
Last year's margin after a notional tax, with each new dollar of sales tying up equipment and working capital at the rate its balance sheets show. Above these rates, growth needs more borrowing or outside money.
Customer deposits line up with the revenue on your returns (FY2024 within 1%).
| Year | Months | Customer deposits | Revenue (return) | Deposits vs. revenue |
|---|---|---|---|---|
| FY2025 | 9 of 12 (estimate) | $2,161,947 | $2,197,800 | 2% lower |
| FY2024 | 12 of 12 | $2,029,264 | $2,005,200 | 1% higher |
What a buyer will askDo the bank deposits support the revenue on your tax returns? This is the core of a proof of cash.
What to doNothing to fix. Keep these statements handy for the buyer's accountant.
Your books and returns differ more than buyers expect in FY2023. Some difference is normal (cash vs. accrual accounting, depreciation, year-end entries by your CPA).
| Year | Revenue (return) | Revenue (books) | Net income (return) | Net income (books) | |
|---|---|---|---|---|---|
| FY2025 | $2,197,800 | $2,207,200 | $173,443 | $179,543 | Looks good |
| FY2024 | $2,005,200 | $2,005,200 | $75,778 | $75,778 | Looks good |
| FY2023 | $1,827,500 | $1,715,500 | $80,800 | $39,800 | Worth a look |
What a buyer will askDo the income statements from your accounting software match what you filed?
What to doAsk your CPA for a short reconciliation of books to return.
Balance sheet cash matches the bank statement.
| As of | Balance sheet cash | Bank ending balance | Difference |
|---|---|---|---|
| Dec 31, 2024 | $215,400 | $215,400 | $0 |
What a buyer will askIs the cash on your balance sheet really in the bank on that date?
What to doNothing to fix.
The lowest month-end balance, $21,400 in February 2024, covers about 12% of a typical month's deposits. A thin cushion makes buyers ask how the business handles slow months.
| Measure | Amount |
|---|---|
| Average month-end balance | $166,067 |
| Lowest month-end balance (February 2024) | $21,400 |
| Typical month of customer deposits | $173,844 |
| Weakest month for deposits (January 2024) | $144,078 |
What a buyer will askDoes the business keep enough cash on hand, and how does it get through slow months?
What to doBuild a cash reserve before going to market, and be ready to explain the low points.
$115,000 of $3,765,724 deposited over 21 months (3%) looks like transfers, loans or owner money rather than customer payments.
What a buyer will askAre loans, transfers or owner money being counted as revenue?
What to doNothing to fix.
Add-backs make up a large part of your adjusted earnings. Buyers accept them when each is documented, but they test every one.
| Year | Reported EBITDA | Add-backs counted | Share of reported | Adjusted EBITDA |
|---|---|---|---|---|
| FY2025 | $244,343 | $39,400 | 16% | $283,743 |
| FY2024 | $143,678 | $56,000 | 39% | $199,678 |
| FY2023 | $145,100 | $20,500 | 14% | $165,600 |
What a buyer will askHow much of the profit you're selling comes from adjustments rather than the books?
What to doKeep a receipt, statement or invoice for every add-back.
No two counted add-backs look like the same expense.
What a buyer will askIs any expense added back twice because it showed up in more than one document?
What to doNothing to fix.
These one-time add-backs appear in more than one year: Equipment repair (one-time) (2023, 2025).
What a buyer will askIf a 'one-time' cost shows up every year, is it really a normal cost of doing business?
What to doRemove them, or be ready to show why each year's cost was different and won't continue.
1 add-back worth $2,400 was typed in rather than found in a document.
What a buyer will askCan you prove each add-back?
What to doGather a receipt, invoice or statement for each before buyers ask.
3 charges that look personal, about $8,940 a year: Hickory Ridge Country Club, Family phone plan, Streaming subscriptions.
What a buyer will askAre personal and business money kept apart?
What to doCount the real ones as add-backs (with proof), and run personal costs through a personal account from now on.
Revenue grew about 10% a year and margins held steady.
| Year | Revenue | Gross margin |
|---|---|---|
| FY2023 | $1,827,500 | 45.0% |
| FY2024 | $2,005,200 | 45.6% |
| FY2025 | $2,197,800 | 46.3% |
What a buyer will askIs the business growing, and are margins consistent from year to year?
What to doNothing to fix.
January to September 2026: revenue of $1,747,251, on pace for about $2.3M for the year (6% above FY2025). An estimate from 9 months: busy and slow seasons can move it.
| Revenue | Reported EBITDA | Gross margin | |
|---|---|---|---|
| 2026 year to date (9 mo) | $1,747,251 | $194,253 | 46.3% |
| Full year at this pace (estimate) | $2,329,668 | $259,004 | – |
| FY2025 | $2,197,800 | $244,343 | 46.3% |
What a buyer will askHow is this year going compared with last year? Buyers ask for this year's numbers to date.
What to doUpdate it each quarter while the business is for sale.
Customers pay in about 34 days.
| Measure | As of Dec 31, 2024 |
|---|---|
| Days to get paid (receivables) | 34 days |
| Days of inventory on hand | 32 days |
| Days to pay suppliers (payables) | 24 days |
What a buyer will askHow long do customers take to pay, and how much cash is tied up in inventory?
What to doNothing to fix.
$210,000 of debt, about 0.7 times adjusted earnings. $25,000 is owed to owners.
What a buyer will askWhat debt comes off the price at closing, and are there loans between you and the business?
What to doMost sales are cash-free, debt-free: debt is paid from your proceeds at closing. Settle or document owner loans before a sale.
Total assets on your balance sheet match your return closely.
| As of | Tax return | Balance sheet | Difference |
|---|---|---|---|
| Dec 31, 2024 | $948,000 | $909,650 | -$38,350 |
What a buyer will askDoes the balance sheet you show them match the one on your return?
What to doNothing to fix.
2 documents missing from the standard three-year set.
| Year | Tax return | Income statement | Balance sheet | Bank statements |
|---|---|---|---|---|
| 2025 | Yes | Yes | Missing | 9 months |
| 2024 | Yes | Yes | Yes | 12 months |
| 2023 | Yes | Yes | Missing | None |
What a buyer will askThree years of returns, income statements and balance sheets, plus recent bank statements.
What to doFill in the missing years on the Upload financials step.
This preview runs common due-diligence checks on the documents you provided. It isn't an audit, a review, or a quality-of-earnings report, and it isn't accounting, tax or legal advice. A buyer's accountant will do their own work; this helps you get ready for it.
Upload your tax returns and statements. We read them for you, removing Social Security, tax ID and account numbers first, and your files stay private to you and your deal team.
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