Are Your Financials Dependable Or Just Optimistic?

Welcome back to another edition of The Wise Exit newsletter. This week, we're covering:

• Why "pretty" financials don’t matter if they’re not defendable

• 5 questions that expose weak spots in your numbers

• 3 actions to help you build buyer-ready financial confidence

Let’s dive in.

💡 One Big Idea

Are Your Financials Defendable Or Just Optimistic?

When a buyer looks at your numbers, they’re not just verifying performance. They’re measuring confidence, as well.

Confidence that the revenue is real. Confidence that the expenses are accounted for. Confidence that the numbers will hold up even after you’re gone.

And if they can’t confidently connect the dots from financials to operations to profitability?

They either walk away or discount massively.

It's an all-too-common trend in exits:

Founders might have strong EBITDA but no add-back documentation. Their revenue growth looks great on paper, but it isn’t mapped to recurring customers. Or they have forecasts that are optimistic but aren't rooted in historical patterns.

That’s why defendable finances matter more than just their appearance.

Because you don’t need to be perfect. But your books do need to be normalized, transparent, and supported by clear operational logic.

The founders who walk away with the best deals aren’t just the ones with the best numbers.

They’re the ones who can stand behind them with confidence, clarity, and clean documentation.

Your Action Items:

1. Stress-test your numbers with an outside advisor: Get a second set of eyes on your books and ask yourself, "What would a buyer question here?"

2. Build a 12–24 month forecast tied to real assumptions: Not a hockey stick graph. A model grounded in actual customer trends, costs, and margins.

3. Document the key wins and losses behind your financial story: Highlight what drove growth (or decline) and what the buyer can expect moving forward.

If you need help with any of this, just reply to this email or contact us here. I’m happy to walk you through it.

❓ 5 Key Questions to Ask Yourself Today

1️⃣ If a buyer asked you to walk them through your last 3 years of EBITDA, could you clearly explain it to them?

Too many founders guess or generalize. Buyers want precision.

2️⃣ Are your forecasts based on real operating data (like pipeline, churn, and margins) or just gut feel?

Optimism isn’t a strategy. Defensibility is.

3️⃣ What recurring revenue do you have, and how clearly is it separated in your P&L?

Buyers pay premiums for predictability, but you have to show it.

4️⃣ Have you run a financial stress test with an M&A-savvy accountant?

Your books might be clean for taxes. But that doesn’t mean they’re buyer-ready.

5️⃣ If a buyer flagged an inconsistency in your numbers, how quickly could you pull the supporting documentation?

Confidence comes from readiness.

📋 3 Action Items For This Week

☑️ Schedule a financial review with your CPA or controller: Ask them to flag anything that might raise concerns in diligence.

☑️ Start separating out one-time expenses and owner-related costs: These are key add-backs that directly impact your valuation multiple.

☑️ Build a folder for financial documentation: Think things like past P&Ls, tax returns, payroll reports, and customer contracts. This will save you weeks later.

That’s all for this week.

Remember that clean books don’t just get you a deal. They get you a better deal.

Until next time,

Brian Dukes
Managing Partner at Exitwise