Dear Insider,
Maybe you have a CFO and a team of accountants, maybe you have a bookkeeper, or maybe you have something in between. Selling your business is a high-stakes endeavor—one where a single misstep can cost you millions, delay closing, or even kill the deal entirely. If you are considering this pathway, put some thought into the capabilities and reliability of this critical part of your team.
No deal can survive without regular, clean financials.
Mergers and acquisitions (M&A) are a different beast. If you want to maximize value, avoid tax nightmares, and get to the finish line with your deal intact, you should evaluate whether you need to hire a CPA who can be relied on to keep delivering a clear financial picture throughout the transaction.
To understand what is at stake- let’s look at what happens when a seller relies on a bookkeeper or CPA who isn't up to the task.
Case Study: How a Bookkeeper’s Blunder Cost a Business Owner $2.5 Million
Jim ran a successful engineering company for 30 years. When he decided to sell, he leaned on his longtime bookkeeper, Linda, who had managed payroll, invoicing, and taxes for over a decade. But Linda wasn’t an experienced CPA—she had no experience with producing the clean financials for a buyer on the cadence needed.
The Red Flags Started Early:
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Misclassified Expenses: Linda had been holding off on the timely entering of invoices into the financial system out of a misplaced belief that the accrual numbers would impact their tax situation. She didn't realize the critical difference between cash and accrual for tax purposes.
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Unprepared Financials: When the buyer’s due diligence team requested normalized financial statements, Linda provided QuickBooks exports riddled with inconsistencies. Every time they asked for clarifications, the deal stalled.
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Tax Time Bomb: Linda didn’t understand how different deal structures impact taxes. She was not even remotely equipped to provide insights into the tax implications of different deal structures, i.e. how an asset sale could trigger massive tax liabilities—creating a tax implication of an extra $2.5 million.
The result? The deal collapsed. The buyer walked away, and when Jim finally hired a capable CPA and an M&A advisor, they had to spend months cleaning up his financials before going back to market.
Moral of the story? When selling your firm, do not lean on someone learning how to do this for the first time. If you are a bookkeeper considering whether you are capable of helping the firm get through this process, consider recommending that the firm hire additional support to help you get through this.
The Real MVP: Why having a capable CPA is Non-Negotiable
A seasoned CPA isn’t just there to “do the books.” They’re a financial bodyguard, helping clear out accounting landmines that could blow it up, and partnering with your M&A Advisor to make sure the accounting lines up perfectly behind each key deal point. For some sellers, simply having an experienced CPA assist with the accounting needs for the deal is enough.
The demands of an M&A transaction on your accountant or accounting team are significant, and these individuals are often strained by multiple long days in a row during the due diligence process. Ask yourself if you feel comfortable with the deal resting on this individual, or whether you might want to hire back up for them.
Depending on the size and expected complexity of the deal, you may also need a CPA who is a capable tax advisor and will be able to work with the M&A Advisor to build out the tax component of the deal. Here’s how either of these individuals do their part to help you get through the deal:
- The Right Accounting Practices Are Critical for a Deal to Be Done Right:
Buyers base their offers on clean, reliable financials. An effective CPA will:
✅ Provide clear information on a regular basis throughout the transaction process allowing your M&A advisor to normalize your EBITDA by adjusting for non-recurring expenses and add-backs
✅ Present financial statements in a format buyers understand and trust.
If your numbers look messy or unreliable, expect a bad hit to the offers made by buyers—or for them to walk away entirely after a process has dragged on for far too long.
- A CPA with M&A Tax Advisory Experience Will Avoid Tax Nightmares
Tax implications on a business sale are complex, and the difference between a great and terrible tax outcome can be millions of dollars. An M&A CPA will:
✅ Make recommendations to the M&A team to help your advisor structure the deal (i.e. asset sale vs. stock sale) to minimize taxes.
✅ Help you take advantage of tax-saving strategies like an F-reorg or 1031 exchanges.
✅ Ensure compliance so the IRS doesn’t come knocking later.
- Preventing Last-Minute Deal Disasters
Buyers will scrutinize every number you provide. A CPA with M&A experience ensures:
✅ Your financials can withstand due diligence without delays
✅ No hidden issues (undisclosed liabilities, revenue recognition errors, etc.) come back to bite you
✅ The CPA paired with your M&A Advisor as well as an experienced M&A attorney ensure that the deal as written will be the best fit for you and your team.
Final Thought: Do It Right, or Pay the Price
Selling your business is a once-in-a-lifetime event. You’ve spent years—maybe decades—building something valuable. Why risk it all by using the wrong team?
A bookkeeper or a general accountant is NOT an M&A expert.
If you want the best deal, the smoothest process, and the highest payout, you need to consider whether you will want to hire additional accounting support to form a key part of your deal team.
Do you know your team is ready, or do you have doubts about whether they can handle the task? Or are you a buyer who has faced these issues with sellers before? Do you have a question or other comment? Let us know with a comment below.
If you're interested in learning more about the world of M&A in this industry, PSMJ will be hosting the AEC M&A Summit on February 26-28, 2025, in the Grand Bahamas, with more information here: https://go.psmj.com/aecmasummit
*All comments are reviewed by PSMJ’s M&A advisory and ownership transition practice and are not shared publicly unless you request them to be.