Want to Sell Your Company in 2026 – Do These 5 Things Now
By Ron Buck, Regional Director, Murphy Business & Financial – Carolinas
If you are considering selling your company in 2026, here are five and a half essential steps you should be taking (or not taking, as the case may be) between now and year-end and over the next few months.
First, a little background on exit planning before we tackle the to-do list. According to a Business Enterprise Institute (BEI) study, 79% of business owners plan to exit their businesses in the next ten years. Still, most lack a written exit plan and haven’t taken the necessary steps, like valuation and employee training. If you are a few years from implementing your exit strategy, now is the time to start planning, obtaining a valuation, and preparing the company for sale to maximize the sale price.
Now, for the tactical steps, you need to take them within the next few months if you plan to sell in 2026 or 2027.
Buyers and bankers prefer to see tax returns for the most recent year. They will not give full weight to internally generated P&Ls. So plan early, talk with your accountant, and get yours finished early – don’t get caught in the March/April crush with everyone else, and by all means, DO NOT plan on filing an extension. Here are three bonus corollaries: first, choose carefully before switching from the accrual to the cash method, or get a cash-to-accrual reconciliation or conversion. Here’s why: tax returns are the preferred source (as opposed to internal P&Ls), and the accrual method is preferred by buyers, bankers, and valuators because it provides a more accurate picture of a company’s financials and profitability. If you are already using the cash method for your taxes or plan to switch, ask your accountant for a cash-to-accrual reconciliation or conversion to accompany your tax returns. Or have them record the cash-to-accrual conversion on the M-1. This step will provide the roadmap, via the balance sheet, of how the two methods relate. Second, do not file by paper! This can take 6-9 months or longer to process. Third, now is the time to scrub and update your fixed asset list (known as the Federal Asset Report, Tax Asset Detail, or Depreciation and Amortization Report your accountant keeps), and remove the old assets the company no longer uses from the books.
These won’t be able to add back to your cash flow calculation. As the linked article explains, chasing short-term tax savings can harm long-term value, as the title indicates. Click here to read more: Giving Up $2 to Save 30 Cents.
…particularly if you simply accelerate expenses and defer revenue recognition (despite some well-intentioned but generic year-end newsletter advice). This is more detrimental to your overall financial gain than Giving Up $2 to Save 30 Cents. In this situation, you only save the net present value of the after-tax interest income from a year’s delay in paying the inevitable tax. Unfortunately, it could substantially decrease your company’s valuation and gross proceeds.
At this stage of your exit strategy, your financials should reflect the business’s core earnings capacity so potential buyers can see the cash flow and profitability opportunities. Except for contributing to retirement accounts, paying for health, life, and disability insurance (all of which are easily documented and added back), and perhaps a few other items, have an in-depth discussion with your accountant and M&A Advisor, and leave the tax and accounting gymnastics out of the equation.
Failing to do so distorts the financials, artificially inflating your bottom line and creating a false sense of profitability. This can hinder sound business decisions on pricing, expense management, investment, and overall strategy. This inflated profit perception can also lead to unrealistic valuation expectations when it is time to sell. Establishing a market-rate rent provides a clear picture of your business’s operating performance, allowing for accurate financial analysis and ensuring decisions are based on solid data, leading to a more transparent and successful transaction.
While PPP loans and the ERTC saved many companies over the last few years, make sure you are taking a clear view of your financials and recognize where the ERTC is embedded in your P&L and how it could be giving a higher-than-normalized view of your company’s financial strength. ERTC can be difficult to find as it goes by several names and is hidden in different places.
Growth and profitability are always important, but even more so in the year or two leading up to a sale. Positive trends indicate that the company has a viable value proposition, is resilient, is competitive in its market, and can generate the cash flow needed for the buyer to cover debt service and earn a return on their investment. While a business is for sale, the number one thing a business owner can do to improve the outcome is keep their staff and customers happy and revenue and profit growing.
With some planning, forethought, and discipline, your actions over the next few months can significantly improve your prospects of selling your company, successfully executing your exit strategy, and maximizing your net worth. Feel free to contact me for a confidential consultation on how we can maximize your company’s value.
With some planning, forethought, and discipline, your actions over the next few months can significantly improve the prospects of selling your company, successfully executing your exit strategy, and maximizing your net worth. Feel free to contact me for a confidential consultation on how we can maximize your company’s value.
