Transaction reality · Before you buy
A business listing is a sales document, not an audit
Published · Reviewed by The Diligence Standard Team · Updated
A polished listing can make rough information look settled. It may show revenue, profit, owner hours and growth claims without showing how those figures were tested.
How it appears in a real transaction
The seller gives figures to a broker or platform. Those figures are organized into a listing or confidential information memorandum. Some brokers question obvious gaps. Some platforms perform stated checks. But presentation, screening and an independent audit are not the same thing.
A practical example
A listing says the business earns $420,000 a year. The figure includes $110,000 of add-backs and assumes the buyer will do work currently performed by the owner. Until those items are tested, $420,000 is a claim, not dependable take-home earnings.
What to do next
- Ask who prepared every important number.
- Ask exactly what the broker or platform verified.
- Reconcile profit to tax returns, bank activity and the general ledger.
- Price the labor needed to replace the owner.