• Frank Haverkamp

Maximize Your Value by Recasting Your Financials

One of the biggest mistakes a seller can make is to provide a potential buyer unadjusted financial statements, tax returns, or any other form of financial history that does not reflect the true earnings power of your business.

If you want to create excitement in your pool of buyers, you need an experienced professional to dissect your financial statements and adjust cash flows for various add backs, such as depreciation, interest payments, discretionary expenses, and non-recurring items that a new buyer would not incur. This process, called “recasting,” adjusts your financial statements to show the economic cash flows, or “Seller’s Discretionary Earnings,” that a hypothetical market participant would expect in the event of a business transaction. Through the recasting process, the seller reveals the true earnings power of their business in order to create the best opportunity of maximize sale price. When cash flows are projected into the future and discounted back to their present value, a prospective buyer will then understand the value of your business based upon on the business’s expected cash flows. To further explore this concept, reach out to your local broker and ask for a complimentary business valuation and understand what your business is worth today.

Frank Haverkamp