David C Barnett Small Business and Deal Making M&A SMB More Balance Sheet Bombs
Jun 4, 2025
Dive into the critical world of balance sheets, where misrepresented liabilities can lead to financial pitfalls. A riveting case study reveals the risks of poor accounting practices and shares essential strategies for safeguarding your business. The host emphasizes audience engagement and the importance of entrepreneurial resources, promoting valuable services for those looking to sell their businesses. Tune in for insights that could help you navigate the complex landscape of small business finance!
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Buyer Faces Undisclosed Liabilities
- Tim bought a business only to find undisclosed liabilities that were not on the balance sheet.
- He had to negotiate with the seller to recover some costs, highlighting risks in stock purchases.
Hidden Payables Inflate Profit
- Not recording bills immediately understates payables and inflates profitability.
- This common accounting issue can mislead buyers about true business liabilities.
Expense Timing Skews Profit
- Delaying expenses to the next accounting period artificially boosts profitability in the current period.
- This timing shift can misrepresent the business's true financial health at valuation.