An individual owner may have been in the business for a long time and have a strong enough understanding of how the business is doing without any detailed financial reports. The buyer will not have that same information and ability.

Without adequate information, most qualified buyers will not complete a deal. If they do complete the deal, they will probably assume the worst case scenario and discount the price accordingly.

Sellers should work with their accountants to develop detailed reports that will help them and buyers to understand their businesses better and provide more assurance that the financial information is accurate.