Preparing to Sell Your Business: Questions to Ask Your CFO 

Deciding to sell your business is a huge step for any owner. Beyond the emotions, there’s a long list of items small business owners need to check off, especially when it comes to their financials. It’s best to begin having conversations with your trusted financial advisor far in advance of the business sale, even up to five years before your planned exit. While that timeframe may sound overkill, the longer runway you give yourself, the more you can increase the market value of your business. A strong CFO or qualified CPA helps you prepare for due diligence, identify risks, and position your company for the best possible sale price.  

So, what should you be asking your CFO to optimize the value of your business? Here are some key questions and focus areas to consider: 

1. Are our financial records ready for due diligence? 

New owners want clean, reliable financial statements they can trust. After all, no business owner wants to walk into hidden costs or liabilities right from the start. Therefore, one of the most important requirements for prospective buyers is to find a business with accurate financial data in place. Ask your CFO: 

  • Are all balances on the balance sheet validated? 
  • Do our financial statements reflect industry-standard accounting practices (such as GAAP and revenue recognition)? 
  • Could someone outside the company easily understand and benchmark our financials against competitors in the industry? 

High-quality financial reporting is foundational. Without it, you risk slowing down — or even derailing — the sale process.  

2. Which KPIs and metrics should we be tracking? 

Metrics tell the story of your business beyond the numbers on a balance sheet. They unveil both financial and nonfinancial profit drivers within your business. At a minimum, make sure you’re tracking: 

  • Gross margin 
  • Net income 
  • EBITDA (a critical metric for most buyers across industries) 

On top of that, your CFO should help identify industry-specific KPIs — whether customer, operational, or people-related — that make sense for your business. Even more important: ask how your company’s numbers stack up against industry benchmarks. Buyers will be making those comparisons, so it’s best to get ahead. 

3. Where are our biggest risks? 

Surprises are the last thing you want in a buyer conversation. A risk assessment is an invaluable tool here. By evaluating risks and liabilities early, you provide your teams with ample time to solve these issues and prevent them from decreasing market value. For example, a thorough review might cover: 

  • Legal: Do we have a buy-sell agreement? A succession plan? Are we missing any other legal documents? 
  • Insurance: Are policies adequate and up to date? 
  • Financial & Estate Planning: Are personal financial plans and wills structured appropriately? 
  • Tax: How are we managing risk around audits and tax implications? Do we have strategies in place to decrease our tax liabilities? 
  • Banking: Are our loan terms competitive, and do we have the right lines of credit available? 
  • Valuation: Do we have a current valuation benchmarking our business against competitors in the industry? Has the valuation identified where there may be opportunities for improvement to increase market value? 

By addressing risks in advance, you’ll be better positioned and more confident during negotiations. 

4. How healthy is our cash flow? 

Cash flow isn’t just a day-to-day concern — it’s a key signal of sustainability and profitability for potential buyers. Ask: 

  • Is our cash flow predictable? 
  • Does it support the long-term business model? 
  • What trends do we see historically, and how might a new buyer interpret them? 

There are many strategies business owners can use to increase cash flow and liquidity. Utilize your cash flow forecast to identify obstacles in the way to reaching financial goals.  

5. What operational improvements should we make before going to market? 

Financials matter, but buyers also care about how the business runs. Take a critical look at operational processes and areas of weakness. Tightening these up ahead of time not only reduces risk but also makes your company more attractive and easier to transition to a new owner. 

The sale of your business isn’t just about finding the right buyer — it’s about presenting your company in the best possible light to receive the highest asking price possible. The right CFO can help you strengthen financial health, highlight the right KPIs, identify and mitigate risks, and ensure your operations support a smooth, successful transaction. 

If you don’t have a CFO in place, this is the moment to bring in an experienced financial advisor, like a skilled CPA or a virtual CFO service. The goal is to walk into buyer conversations with confidence, clarity, and a clear understanding of what your business is worth. 

To learn more about how our Virtual CFOs assist clients in commanding the highest price for their businesses, download our free booklet, The Role of Dynamic Forecasting in Ensuring Business Growth. Discover the strategies we use to develop cash flow forecasts and business growth plans.

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