Preparing to sell a business, especially for smaller entities, involves multiple steps to ensure a smooth transaction. One strategic move that can benefit sellers immensely is conducting a voluntary statutory audit before the sale process begins.  

At Fiander Tovell, our experienced team can guide you through the audit process, ensuring accurate and compliant financial statements. We specialise in helping businesses like yours optimise their financial reporting, enabling you to present a robust financial profile that instils confidence in stakeholders and supports your strategic objectives. 

The Benefits of a Voluntary Audit Before Selling 

An audit provides greater assurance that the figures you present to potential buyers are accurate. This added credibility can significantly reduce the likelihood of substantial adjustments to your earnings being uncovered during the sale process, especially in transactions based on multiples. 

Secondly, the assurance from the audit can instil greater confidence in the potential buyer regarding the value of the business. This increased trust may lead them to limit the scope of their due diligence, reducing the time and resources spent by their advisors. 

Additionally, preparing for an audit and providing the necessary documentation can facilitate the legal, financial and tax due diligence required during the transaction process. The audit will also highlight areas for improvement in your documentation and control environment, further streamlining the due diligence process. 

Six Key Audit Preparations to Support a Successful Transaction 

1. Ensuring accuracy in financial statements: Your auditor will ensure that your year-end and month-end processes produce an accurate trial balance, supported by source documents and reconciled with prior accounts. For due diligence, having a consistent history of management and statutory accounts with minimal adjustments is crucial and should be addressed before the sales process begins. 
2. Ensuring availability of essential documentation: The audit process ensures you have all necessary source documentation on hand—such as bank statements, credit card statements and supplier invoices—which will also be required for the due diligence process. 
3. Verifying completeness of personnel files: The auditor will review your personnel files to ensure all required data is present, such as signed contracts and letters regarding pay raises. Any identified gaps should be addressed and filled in before the due diligence process. 
4. Gathering key contracts: The auditor will require copies of all leases, hire purchase agreements and other key contracts. This information will also be necessary for the due diligence process. 
5. Ensuring compliance with Companies House: The auditor will ensure the trial balance aligns with Companies House records, such as share capital accuracy, and that board meeting minutes and dividend documentation are available—information that is also required for due diligence. 
6. Preparing budgets and cash flow forecasts: The auditor will require supporting budgets and cash flow forecasts for assessing going concern. This data is also crucial for due diligence, as it helps buyers understand post-acquisition expectations. Many small entities may need to develop these forecasts before the sales process. 

Even if you decide against an audit, reviewing these six areas—potentially with the assistance of your current advisors or new auditors experienced in due diligence—can help smooth the sales process. 

How Fiander Tovell Can Help 

At Fiander Tovell, we specialise in guiding businesses through the audit process, helping you ensure accurate and compliant financial statements. We can assist you in conducting a voluntary audit, providing the credibility needed to instil confidence in potential buyers and streamline due diligence. 

For assistance or more information on how to achieve a successful transaction process, get in touch with us today.