Not concerning at all. Most owners won’t, and may not know what it is. As long as you’ve got P&Ls, Balance Sheets, and corporate tax returns, you should be fine. You can build your own Statements of Cash Flows off of those.

Agree with Joseph. I wouldn’t think twice about this being a nonissue.

Agree with ^[redacted]‌ and ^[redacted]‌, we rarely see Statements of Cash Flow in lower middle market. Likewise, we rarely see audited financials from companies below $15 to $20 million in revenue, unless they are required for a bond or bank covenant.

Agree with Joseph.

I have worked for a very successful small business owner, who despite being very well educated and with multiple decades of experience in the business had never heard of the three financial statements. So, if your question is whether this is a sign the owner is actively hiding something from you, then the answer is probably no. They simply use the PnL statement as approximation. But if your question is can you get an accurate picture of where the cashflow is coming from, then the answer is again no (at least in that case). The only way to begin to understand was to start working with the owner. Reconstruction of statements and professional due diligence would provide better numbers but still would not provide an accurate picture.

In my 35 years as M&A Intermediary representing buyers and sellers (for deals valued between $1 M to $100 M) I have seen few thousand financial statements. Very rarely I see cash flow statement. And, even when the seller has it, I rarely look at it, and more or less never use it. I focus on the source of "new" cash (the income statement) and the consumption of cash by the business and the current owner (the balance sheet). CF statement is DERIVED from IS and BS. anyway. Having IS and BS, and that too monthly, is a luxury in the LLM segment. Instead of CF statement, I develop "EBITDA Flow" Statement.

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.

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.

interesting.