Valuation
What valuation records should I prepare before meeting an M&A advisor?
The exact records to gather before your first M&A advisor meeting, in order of importance, and the questions you should be ready to answer.
By Michael D. Rubin, CEO & Founder · September 2026 · 945 words
Bring three years of financial statements and tax returns, your current year-to-date numbers, a list of the owner expenses you add back with support for each, and a short summary of customers, employees, debt and leases. With those records an advisor can give you a reliable opinion of value at the first real meeting instead of an educated guess.
You do not need a data room or a polished package yet. You need numbers that reconcile and enough context to explain them. Here is the checklist, in order of importance.
The core financial records
If your statements and tax returns disagree, bring both along with a note on why. Differences are common and usually explainable. Unexplained differences are what cost owners money later, when a buyer's accountant finds them first. Paper or PDF copies are fine for a first meeting; you do not need to export anything from your accounting system in a special format.
- Profit and loss statements for the last three full years
- Balance sheets at each of those three year-ends
- Federal business tax returns for the same three years
- A year-to-date profit and loss and balance sheet, plus the same period last year for comparison
- Monthly revenue for at least the past 24 months, if your system produces it, to show seasonality and trend
Your add-back schedule, with proof
Add-backs are expenses in your books that a new owner would not have, added back to earnings to show what the business really produces. Typical examples are your pay above a market wage for the job you do, family members on payroll who do not work in the business, a personal vehicle, a one-time legal settlement or the cost of moving to a new building. List each item, the amount in each year, and where the proof is.
An advisor uses this list to build adjusted EBITDA, meaning earnings before interest, taxes, depreciation and amortization after those adjustments. It is the figure most buyers price from. Be conservative: buyers will test every line, and an add-back you cannot support weakens the ones you can.
Records that explain the business
Financial statements show what the company earned. The records below show why, and whether it will keep earning it under a new owner. They are what separate an average multiple from a strong one, because they let an advisor see the strengths a buyer will pay for and the risks a buyer will price in. Summaries are fine at this stage; a one-page customer list or an employee roster in a spreadsheet is enough.
| Record | Why an advisor asks for it |
|---|---|
| Revenue by customer, top ten for each year | Shows customer concentration, one of the biggest value drivers |
| Revenue by service line or product | Shows which parts drive profit and which revenue repeats |
| Employee list with roles, tenure and pay | Shows management depth and how much the company depends on you |
| Debt schedule | Loans, lines of credit and equipment notes that are paid off at closing |
| Lease or real estate details | Term, rent, renewal options, and whether you own the property |
| Accounts receivable aging | How quickly customers pay and whether any balances are doubtful |
| Equipment and vehicle list | Condition and replacement needs, important in asset-heavy companies |
| Key contracts, licenses and permits | Service agreements, supplier terms and approvals a buyer must be able to keep |
Questions you should be ready to answer
You will also be asked what you need from a sale: the amount that would let you retire, pay off personal debt or fund the next thing. Have a rough figure in mind. It helps an advisor tell you early whether the likely range meets your goal, rather than after months of work.
Honest answers here matter as much as the numbers. A problem you disclose early can be priced or structured around. The same problem found by a buyer during due diligence can end a deal.
- Why are you thinking of selling, and on what timeline?
- What do you want to do after the sale: leave, stay for a transition, or keep a role?
- What happens in the business when you are away for two weeks?
- Are there lawsuits, tax notices, environmental matters or disputes a buyer should know about?
- Has anyone already approached you about buying the company, and what did they say?
If your records are not ready yet
Do not wait for perfect records before having a first conversation. Bring what you have and be clear about what is missing. Common gaps are a year of statements that were never finished, add-backs that were paid in cash with no receipt, customer revenue that the accounting system cannot split out, and leases that expired and continued month to month. None of these stops a first meeting. An advisor can tell you which gaps matter for value and which are cosmetic, and whether the fix is a month of bookkeeping or a year of changes. The guide to preparing your business for sale covers the clean-up in detail. The same records will also support a formal written valuation later if a lender, partner or estate plan ever needs one.
How MDR & Associates uses what you bring
Our free, confidential discovery meeting starts with a review of three years of your financials and ends with an opinion of value: a low-to-high range and the reasons behind it. The more complete the records above, the tighter and more useful that range will be, and everything you share stays confidential. If you are not ready for a meeting, the valuation snapshot gives a quick first range from a few figures. When you have the records together, contact us to set up the meeting.
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