EP #10: How To Prep Your Books And Taxes For A Business Sale with Brian Nichols

Bad deals often look “fine” right up until due diligence, when the buyer starts asking basic questions your books cannot answer. We sit down with CPA and tax partner Brian Nichols of Gross Mendelssohn to talk about what actually builds trust in a sale and what quietly destroys it, especially for small business owners and lower middle market sellers preparing for an exit.

We get practical about the roles on your team and why you usually need all three: a bookkeeper to keep daily transactions accurate, an accountant to adjust and interpret the financials, and a tax advisor to plan the transaction structure and model after tax proceeds. Then we walk through the credibility ladder of financial statements internal, compiled, reviewed, and audited and when buyers, banks, or larger acquirers tend to expect each level of assurance.

From there, we dig into the deal mechanics that change your take home number: asset sale vs stock sale, purchase price allocation, goodwill, depreciation and amortization benefits, and the “hot assets” that can trigger ordinary income taxes. We also cover why a buyer might insist on a stock purchase for contract reasons and how a Section 338(h)(10) election can sometimes deliver a stock sale legally while treating it like an asset sale for tax purposes.

We close with the planning advice sellers wish they heard earlier: bring in a CPA 2 to 3 years before you sell when possible, use tools like installment sales, understand earnouts and seller financing, and watch for working capital adjustments that can shift the final price. Subscribe, share this with an owner who is thinking about selling, and leave a review with the biggest question you have about taxes or due diligence.

Ready to explore your financing options? Visit horizonbrokers.com or call 703-910-7384 for personalized guidance on making your business acquisition dreams a reality.