Don’t Buy a Mess: Why Financials Make or Break a Deal

Welcome to another edition of The Wise Exit newsletter! This week, we’re covering:

• Why messy financials are one of the fastest ways to kill a deal

• 5 questions that reveal whether your financial house is really in order

• 3 steps you can take this week to get your numbers buyer-ready

Let’s dive in.

💡 One Big Idea

Don’t Buy a Mess: Why Financials Make or Break a Deal 

It doesn’t matter how great your brand is, how loyal your customers are, or how strong your team looks on paper.

If your financials are a mess, that deal you're negotiating with a buyer? It's already on thin ice.

What you have to realize as a founder or business owner is that you’re not just selling a business. You’re selling a stream of predictable and defensible financial performance. Year-over-year. 

So when a buyer can’t clearly see how your business makes, keeps, or forecasts money, it doesn’t inspire confidence. It raises massive red flags.

It's all too common in the M&A world:

A founder with a really solid business gets approached by a serious buyer. The interest is real, and the excitement is mutual. But once the deal enters diligence, everything slows down.

Why? Because the numbers are all over the place — missing documents, disorganized books, personal expenses mixed with business expenses, no normalized EBITDA, zero clarity on margins, customer performance, or seasonality.

Sure, the deal might still close. But I can guarantee it’ll be slower, harder, and more expensive than it needed to be.

Remember that buyers aren’t just investing in your story. They’re investing in your financials.

And if you can’t defend them with clarity and confidence, you’ll either lose leverage or lose the deal.

Your Action Items:

1. Stress test your financials with a trusted advisor: Bring in your CPA or fractional CFO and ask them to walk through your books like a buyer would. Where are the gaps? Where are the skeletons? Get ahead of it.

2. Normalize 3–5 years of EBITDA: Clean up your financials to reflect true operational performance. Separate out owner comp, one-time expenses, and personal spending. This is the language buyers speak.

3. Build a rolling 12–24 month forecast: Use this to tell the story of your future. Highlight key wins, costs to support growth, and realistic targets that reflect seasonality and customer behavior.

If your financials can’t speak for themselves, a buyer will do the talking for you. And they won’t be generous.

If you need help pressure-testing your books, reach out anytime. I’m happy to connect you with the right experts.

❓ 5 Key Questions to Ask Yourself Today

1️⃣ If a buyer asked for your last 3 years of financials and tax returns, could you send them today, without edits, explanations, or delays?

2️⃣ Have you clearly separated personal expenses and owner perks from your operating P&L, and can you defend each add-back with documentation?

3️⃣ What story do your margins tell over the last 3 years? Are they stable or improving, and why?

4️⃣ Do your monthly financials match your operational KPIs (like customer retention, churn, or CAC), or are they telling two different stories?

5️⃣ If a buyer had their CFO walk through your books tomorrow, what’s the one thing you’d be most nervous for them to find?

If any of these questions made you sweat, now's the time to start cleaning things up.

 3 Action Items For This Week

☑️ Schedule a financial audit sprint: Block 2 hours with your CPA or finance lead to identify gaps, clean up accounts, and document key add-backs.

☑️ Create a normalized EBITDA view: Build a simple spreadsheet that shows EBITDA after removing owner expenses, one-time costs, and any non-core activity.

☑️ Draft a 12-month financial forecast: It doesn’t have to be perfect. But it should show how you expect to grow, what it’ll cost, and how you’ll fund it.

That’s all for this week.

Don’t let sloppy books cost you a life-changing exit. Remember that your numbers should be an asset, not an obstacle.

If you need a second set of eyes on your financials, just hit reply to this email. I’m happy to help or point you in the right direction. 

Until next time, 

Brian Dukes
Managing Partner at Exitwise