How alerting is it to have an owner who does not have a cash flow statement

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by a searcher from Massachusetts Institute of Technology - MIT Sloan School of Management
in New York, NY, USA

5yrs ago

How alerting is it to have an owner who does not have a cash flow statement

The owner has a balance sheet and P&L but no Statement of Cash Flows. Is this a deal killer for others?

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reply by a searcher 5yrs ago
from University of Pennsylvania

I think many have already made the point that a lot of owners are not financially sophisticated enough to produce a cash flow statement, or even know how to read it. That was our anecdotal experience as well and we actually realized that the owner's lack of financial acumen was a very large opportunity for us. We feel like we ended up getting a very good price on the business but you have to be able to get comfortable with what limited financial information you are provided.

reply by a searcher 5yrs ago
from INSEAD in Terrigal NSW 2260, Australia

Agree - there are very few SMB's that produce cash flow statements, and I'm very rarely seeing any provided at either Information Memorandum stage or even during due diligence. Typically I construct my own.