Tidying up before you exit: how to build robust management information for your buyer

30 November 2023

A business with good quality management information is a business that is able to reflect its stability, scalability and management prowess to potential buyers.

But how exactly do you build a robust information system that reflects the value of your business? In this series our experts discuss the key considerations for a strong exit plan. Michael Cole explains how to build an effective information system in 12 steps.

Robust management information can differentiate you from your competitors. It shows that you’re running your business efficiently, with a strong oversight of your finances and the marketplace.

Strengthening your management information is something that I would recommend to all business owners – it’s just good practice. But it’s even more important when preparing for your exit.

It will help articulate the value of your business to prospective buyers, prepare you for the intricacies of due diligence and allow for a smoother exit process.

Getting organised. How to strengthen your management information

When it comes to strengthening and organising your information it can be hard to know where to start. There’s so much to keep tack of. The main point to keep in mind is that if you start organising early, you won’t be left to scramble for information at the start of due diligence.

So, where do you begin? It’s useful to compartmentalise here. Here is a checklist of things to consider to get you started:

  • Are all of your filings up to date? Take a look at your tax returns, annual accounts, and confirmation statements to ensure they’re all accurate.
  • Have you reviewed your employee contracts? You'll need to ensure that there are no discrepancies in remuneration packages and that all of your team are on the correct contracts – especially those who have been with you since the beginning and may have moved through different roles. It helps to keep your records as consistent as possible.
  • Have you obtained verbal and non-formal agreements with suppliers and customers? You’ll need to solidify these in writing.
  • Have you reviewed your lease agreement to ensure there are no issues since signing?
  • Do you know where all of your insurance details and certificates are?
  • Do you have monthly management accounts which align with your statutory accounts?
  • Is your paperwork and internal recordkeeping up to date?
  • Do you have any old litigation or claims which need to be reviewed and dealt with?
  • Do you have any historic creditors or debtors that need to be sorted?
  • Is your customer relationship management (CRM) software fully cleansed with no outdated data?
  • Where does all of this data reside? On cloud software systems, or physical copies?
  • If you use different systems to store your data, do these systems integrate to make extraction easier?


Time is of the essence

Getting your business information in order in a timely manner can save you a lot of stress further down the line. This will allow you to take care of any discrepancies before you consider potential buyers.

When it comes to securing a buyer, you will be grateful to have your house in order ahead of time. Especially for due diligence (which we will be discussing in more detail later in this series), it’s a stressful process, but strong management information will allow you to respond to questions in a timely manner.


How can you maximise the use of technology?

If you have everything you need neatly filed away in a cabinet, you could be missing a trick. Manually trawling through papers can take hours, weeks and even months. Whereas cloud accounting or technology can provide the information you need in seconds.

Cloud accounting isn’t just another way of storing your information, it can offer increased accuracy and a level of insight that just wasn’t possible before.

Software systems such as Xero, can track all your data with detailed focus. They provide you with real-time data, helping you to create robust and up to date management information.

After your information has been formulated and stored, you could use AI bolt-on tools to formulate insights and reports from all of the data gathered. This is presented in a user-friendly format and could be presented to potential buyers.

If you’re already using cloud accounting, working with your accountant to review how it’s used can ensure you remain on top of any updates – making sure you’re making the most of the technology at hand.



Supporting you with your management information

Being able to paint a clear picture of your business will show prospective buyers that you’re running your business efficiently. And being able to respond to questions confidently and quickly will help lessen the burden of the due diligence process.

Key to both of these points is robust management information. Investing the time in strengthening your management information will place you in a much stronger position when it comes to your exit.

Our team of experts can provide an expert and external eye, helping to take your management information to the next level.

Get in touch to find out how they can support you. Find out more about our Exit Planning Handbook compiled by our experts to support your exit strategy today.