Preparing Your Financials to Sell a Business in Houston

Eighteen months before you want to sell is when this work should start. It's slow, unglamorous, and it protects your price more effectively than anything that happens during the negotiation itself.

What I learned on the buyer's side

At Johnson & Johnson I ran acquisition and divestiture operations, working diligence and separation planning on live transactions.

Deals rarely die because a business performs badly. They die because the numbers can't be explained. Everything a buyer can't verify gets resolved against you, because ambiguity is risk and risk gets priced into the offer.

The valuation conversation feels like the decisive one. The quality of earnings review is what actually set the ceiling.

Revenue recognition, and why Houston sees more of it

If you book revenue when you invoice rather than when you earn it, monthly profit becomes fiction. Good months and bad months turn into artefacts of timing.

This hits Houston businesses harder than most because so much work here is project-based. Long-duration contracts, milestone billing, retainage held back until completion. Every one of those creates a gap between when cash moves, when work is delivered, and when revenue should properly be recognised.

Percentage-of-completion done loosely is one of the most common findings in diligence on project businesses, and correcting it changes reported earnings in ways buyers notice immediately.

Rebuilding a trailing 24 months on a corrected basis takes time. That's the case for starting early.

The rest of the list

• Personal expenses through the business. Add-backs need documentation a stranger would accept.
• Cash basis books. Most buyers underwrite on accrual.
• Customer concentration. Common in industrial and project work. Surface it before they find it.
• Work in progress and retainage. Both need to be schedulable and defensible, not estimated.
• No data room. Scrambling signals disorganisation elsewhere.

How I run these engagements

Backward from what a buyer will ask. Revenue recognition onto a defensible basis, add-backs documented, trailing financials rebuilt consistently, diligence package prepared before it's requested.

I'm Ben Cohen, founder of Visionary Arc Finance and a former PwC Senior Manager. I work remotely with Houston companies, alongside your CPA and your M&A advisor.

Common questions

How early should we start?

Eighteen months is comfortable, twelve workable. Under six months you're limiting damage, since a corrected revenue basis needs trailing history to be credible.

Do we still need an advisor or broker?

Yes. They run the process and negotiate. I make sure the financial story underneath holds up.

Our percentage-of-completion has been informal. Problem?

It's fixable and it's better found now than by a buyer's analyst. Restating it early is preparation. Restating it during diligence is a credibility event.