9 Numbers a Buyer Asks For, and Whether Your Books Can Answer

Short answer

A buyer will ask for nine specific figures: monthly accrual earnings, gross margin by line, revenue by customer, recurring versus one-time revenue, a documented add-back schedule, monthly working capital, isolated owner compensation, maintenance capex against depreciation, and a reconciliation to your tax return. Most of these cannot be rebuilt credibly after the fact.

Owners usually think a sale gets decided in a negotiation. It mostly gets decided in a spreadsheet, weeks earlier, when a buyer's analyst tries to pull nine numbers out of what you sent them and finds that four of them do not exist yet.

The list below is ordered by how hard each number is to reconstruct late. The first three are close to impossible to produce credibly in the weeks before a deal. The last three are a project you can finish in a quarter. That ordering is the whole point: it tells you where to start.

1. Monthly accrual earnings, three full years

Cash basis books tell a buyer almost nothing, because revenue and the cost of delivering it land in different months. A buyer needs three years of accrual monthly financials with a real close behind them. This is the number one item because restating three years of history in a hurry looks exactly like what it is, and it puts every other figure you present under suspicion.

2. Gross margin by month and by line of business

Buyers do not want an annual margin. They want to see margin by month, split by product line or service type, so they can tell whether growth came with profit attached. That requires cost of goods sold mapped correctly and consistently over time. If your chart of accounts pushes labor or freight into the wrong bucket, the trend is unreadable and you lose the argument that your pricing power is real.

3. Revenue by customer, ranked, for three years

Every buyer calculates concentration. You want to be the one who calculates it first, with the history to show whether the top account has been growing or shrinking as a share of the whole. This means customer-level revenue tracked consistently, which is straightforward going forward and painful to reconstruct backward when invoices were never coded to consistent customer records.

4. Recurring revenue separated from one-time revenue

A buyer wants to know how much of next year's revenue already exists. If your recurring contracts, retainers, and service agreements are buried inside one revenue line with project work, that value is invisible and you get no credit for it. Splitting revenue by type in your chart of accounts is a small reporting decision that changes how a buyer reads the whole business.

5. A documented add-back schedule

Add-backs are the personal and one-time expenses a buyer agrees to remove before applying a multiple. Every one of them needs backup. A schedule that lists items with the supporting invoice or agreement attached tends to survive review. A line labeled owner expenses does not, and once one add-back looks soft, the reviewer starts discounting the rest of the schedule rather than debating it item by item.

6. Net working capital, by month

Deals set a working capital target, usually the trailing twelve month average of receivables plus inventory minus payables. Come in below that target at closing and the price is reduced dollar for dollar. To negotiate the target intelligently you need twelve to twenty-four months of clean monthly balance sheets. Owners who have only annual balance sheets are negotiating a six-figure number blind.

7. Owner compensation, benefits, and personal costs, isolated

A buyer needs to see exactly what the business pays the owner and the owner's family, all in one place: salary, distributions, health coverage, vehicles, phones, travel, and anything else. Scattered across a dozen accounts, it reads as either hidden or careless. Isolated in clearly named accounts, it becomes a clean starting point for the earnings recast instead of an argument.

8. Maintenance capex against depreciation

Buyers compare what you actually spend to keep the business running against your depreciation expense. Several years of capex running well below depreciation says the equipment is aging and the buyer is inheriting the bill. Producing this comparison requires a fixed asset schedule that is actually maintained, which is a bookkeeping habit rather than a heavy project.

9. A reconciliation from your internal statements to your tax return

Your internal financials and your filed returns will not match, and that is normal. What matters is that you can explain the difference on one page. When you cannot, everything you presented becomes questionable and lenders in particular slow down. Building the bridge is usually a short exercise, which is why it sits last, but skipping it undermines all eight numbers above it.

Frequently asked questions

How long does it take to get books to this standard?

For most owner-led businesses with reasonably complete records, three to six months. That covers moving to accrual reporting, restructuring the chart of accounts so margin and revenue type are readable, closing each month on a real schedule, and building the add-back schedule with documentation. Rebuilding three years of badly kept history takes longer and costs more. The work is front-loaded, and once the monthly close is running properly the reporting maintains itself.

Do I need audited financials before I sell?

Usually no. Most owner-led businesses in the lower middle market close on clean accrual financials with a genuine monthly close, a documented add-back schedule, and a quality of earnings review during diligence. Audits become worth the cost on larger deals, with institutional or public buyers, or where revenue recognition is complex. Spending on an audit while the monthly close is still unreliable solves the wrong problem. Fix the close first.

What if I am not selling for another five years?

Then the timing is ideal, because these nine numbers are also how you run the business. Monthly margin by line tells you where to price. Ranked customer revenue tells you where your risk sits. Working capital by month tells you why cash feels tight in a profitable quarter. Owners who build this reporting for management reasons find they are already diligence-ready when the moment arrives, which is a much better position than starting a cleanup under deal pressure.

Where Thryve fits

We build the reporting that produces these nine numbers as a matter of routine: a real monthly close on accrual basis, a chart of accounts structured so margin and revenue type are visible, clean monthly balance sheets, and an add-back schedule with documentation behind every line. Not as a one-time cleanup project, but as the way the business reports from now on.

If you are also weighing what the business would actually sell for and who the buyers would be, Texas Exit Advisors handles the M&A side of that conversation.

Nothing here is legal, tax, or accounting advice for your specific situation. Talk to your CPA about how any of this applies to you.