Every seller arrives with a narrative. Revenue is growing, margin is improving, the dip was temporary. None of that is dishonest and most of it is true. It is also not what a buyer reads first.
A buyer reads the record. The same measure, stated the same way, for as many periods as you can produce, with the awkward months still in it. Last week's edition ended at completion and named a quality of earnings review as the first reason a price moves after a letter of intent. This one goes back to the beginning, because almost everything that review finds could have been settled before the business went to market.
Pick one definition of revenue and hold it
Most management accounts carry more than one revenue line. Billed and recognised. Gross and net of refunds. Before and after platform fees. Any of them can be the right one to present.
The problem is a series that uses one basis for some years and another for the rest. It happens easily when a file is assembled over time by different people, and it is not a rounding difference. It can move a single year by a fifth, and it moves every growth rate and every multiple computed from that series.
Decide the basis. Restate the whole record on it. Say in one line which basis you chose and why.
The monthly record is the one that gets read
An annual table is a summary of something the buyer wants to see underneath. Monthly figures show seasonality, the month a large contract landed, the quarter that did not repeat, and whether a cost line is steady or lumpy.
If you have monthly data, give it. A seller who volunteers thirty-six months of detail is making an argument about how the business is run, not only about what it earned.
A trailing twelve months is not a run rate
Trailing figures are useful because they are current. They become dangerous when an exceptional quarter sits inside the window and nothing in the presentation says so.
A buyer who finds that themselves reprices the whole file, not just that quarter. A seller who points at it first keeps the conversation on why it happened and whether it repeats.
Add-backs need evidence, not adjectives
Owner compensation, one-off legal costs, personal expenses, non-recurring projects. All legitimate adjustments. Each one needs a document behind it and a sentence explaining why it does not recur for a buyer.
An adjusted earnings figure that cannot be itemised line by line is the fastest way to have every other number in the file treated as an estimate.
Stale costs more than imperfect
A record that stops nine months ago invites the buyer to assume the gap is bad news. It rarely is, but the assumption is free for them and expensive for you. Current figures, even unaudited and even soft, price better than a strong year that ended a long time ago.
Two measures are fine, mixing them is not
Plenty of businesses are fairly described by more than one earnings line. Operating profit and seller discretionary earnings. Profit before and after a personnel charge a buyer will not inherit. Presenting both is honest and often helpful.
Quoting one in the summary and the other in the table is what causes the argument, and it always surfaces.
Reconcile it before they do
Take the headline figures in your own materials and rebuild them from the underlying record. Does the annual series sum from the months. Does the trailing figure sum from the same months. Does the margin follow from the two numbers printed beside it.
This is an afternoon of work. It is the highest return preparation a seller can do, and almost nobody does it before going to market.
What good looks like
One basis, stated. Monthly detail behind every annual figure. Exceptional periods flagged by the seller rather than discovered by the buyer. Add-backs itemised with documents. A record that runs to last month.
None of that requires an audit, a new system or a better year. It requires deciding what the numbers mean and then being consistent about it.
The best prepared sellers we work with are not the ones with the strongest year. They are the ones whose figures say the same thing in every document, and who flagged the difficult quarter before anybody asked.
If a buyer rebuilt your numbers from your own records this week, what would they find that you would rather explain yourself?