In partnership with
Zero Results, Zero Sales
They came to your site ready to buy. They typed exactly what they wanted. And your search bar ghosted them.
Traditional site search relies on rigid, exact keyword matching. When a shopper uses natural language or makes a simple typo, they hit a “0 Results Found” wall and leave for a competitor.
Stop letting search bars ghost your best customers. Gladly understands shopper intent and turns dead ends into recommendations that keep shoppers buying.
The Closing Argument
How to Verify a Seller's Financial Claims Before Buying a Business
Key takeaways
Check the seller's financial claims against tax returns, bank statements, accounting records, and customer contracts before agreeing to the final purchase price.
Revenue, expenses, customer concentration, and owner compensation may differ from what appears in the business listing or confidential information memorandum.
Financial discrepancies can affect valuation and deal terms. Resolve material differences before closing and document any agreed adjustments.
You're considering buying a commercial landscaping business for $3 million. The seller reports $2.5 million in annual revenue and $600,000 in adjusted EBITDA with certain adjustments. At five times EBITDA, the asking price appears reasonable.
During due diligence, you discover that the company's tax return reports $2.3 million in revenue, $200,000 less than its financial statements. Bank deposits also fall short of reported sales. The seller explains that the difference comes from unpaid customer invoices, which you'll need to verify.
Start by requesting three years of tax returns, financial statements, and monthly profit-and-loss reports. Compare the figures and ask the seller's accountant to explain discrepancies. Different accounting methods can create legitimate differences, but the amounts should reconcile.
Compare reported revenue with customer invoices, bank deposits, and accounts receivable records. Under accrual accounting, record revenue when earned, even if payment arrives later. Under cash accounting, revenue is generally recorded when payment is received.
Ask for a report showing how long each customer invoice has remained unpaid. A company might report $400,000 in unpaid invoices, but some could be more than 90 days overdue. Check subsequent payments to determine how much was collected. Uncollectible receivables may affect the purchase price.
For expenses, compare financial statements with payroll records, supplier invoices, leases, and insurance policies. Identify rising costs, incorrectly recorded expenses, and obligations missing from the seller's presentation.
Review adjusted EBITDA carefully. Sellers may exclude personal expenses, unusual legal fees, or one-time costs. Each adjustment needs documentation. Expenses necessary to operate the business or likely to recur should remain in the calculation.
Owner compensation deserves particular attention. Suppose the seller earns $80,000 annually but performs the duties of a general manager who would cost $140,000 to replace. Hiring that manager adds $60,000 in annual expenses, reducing estimated EBITDA from $600,000 to $540,000.
At the same five-times multiple, the implied valuation falls from $3 million to $2.7 million. This gives the buyer grounds to reconsider the original price.
Customer concentration presents another risk. A company may serve hundreds of customers but depend on a few commercial accounts for most of its revenue. Request three years of customer-level sales and major contracts. Check expiration dates, termination clauses, and whether contracts require consent before ownership changes.
Also identify revenue unlikely to repeat. A company might have earned $300,000 from a large installation project last year, but that income should not automatically be included in future projections.
Review outstanding debt, tax obligations, equipment leases, customer deposits, and other liabilities. These can affect the cash required after closing and what the buyer actually acquires.
When discrepancies emerge, request supporting records and document their financial impact. A timing difference between invoices and deposits may not affect profitability. Unsupported EBITDA adjustments, lost customers, or recurring expenses omitted from the accounts may justify renegotiation.
Buyers can address material findings through a lower price, revised working capital requirements, seller financing, escrow arrangements, or protections in the purchase agreement.
Before closing, reconcile the figures used to establish the purchase price. Confirm accepted earnings adjustments, major customer contracts, and transferred liabilities. The valuation should reflect what the business can reasonably earn under new ownership.
By the Numbers
KeyBank's 2026 Small Business Survey found that 54% of owners were certain they could cover one month of operating expenses using cash reserves alone, up from 21% in 2024. Only 17% remained focused on short-term survival, while 42% cautiously planned for the future and 28% actively invested in long-term growth. Confidence also improved, with 87% feeling at least somewhat confident making major business decisions, up from 80% in 2025. However, 42% acknowledged second-guessing those decisions, suggesting that financial confidence has improved even as owners remain cautious about spending and expansion.
Test that business idea this weekend
Skip the funding round and co-founder hunt
Describe the business, get the real product
Take payments from real customers immediately
Find out if your idea works in days
Keep going, or try the next one
Discount of $5 applies to first month of any paid plan. You need to sign up via this webpage in order to claim the discount. The discount applies to new and returning users without an active paid plan. Terms apply.
The Reader’s Sentiment
Which best describes you?
Essential Reading
Forbes examines how rising costs are affecting small business owners' personal earnings. A KeyBank survey of 1,500 owners found that one in three are absorbing higher expenses by reducing their own pay instead of raising prices. Inflation was a major concern for 53% of respondents, while a separate Bluevine survey found that 29% had delayed their paychecks because customers paid invoices late. Federal Reserve data showed that 58% of businesses with one to four employees facing financial challenges used owners' personal funds. The article also examines how reduced owner compensation can conceal operating costs, overstate profitability, and affect business valuations.
