In the cold light of day your accounts represent a point in time, eg on the 31st March 2015 the business trading looked like this. Often the accountant will represent the accounts in such a way that it has benefits for the business owner who has no thoughts of selling up.
When you are looking to sell the focus changes, the business needs to be an attractive proposition for a buyer and this means change. Increased Goodwill can be translated as more sales and more positive feedback and ultimately more value. The tangible assets should be changing with explanations, this usualy translates to investment in the business, swapping new for old, old being written off, improvements in the infrastructure when someone is looking to buy the business.
The accounts should also show the financial growth year on year, sounds straight forward but many prospective buyers will look at the following comparisons.
- What was the turnover for the past three years.
- What was the Gross Profit for the past three years.
- What was the Net Profit for the past three years.
If the last accounts do not state an increase they will probably not want to take it forward. Reality being that most business owners decide to sell and want to sell soon and not in 3-years! The more explanations on the accounts the better as the prospective owner will treat that as a means for considering the purchase or definately to ask a few questions more.