If you are the only person who can explain the numbers, you are not running a transferable business yet. You are its finance department.
Buyers treat your month-end close as a maturity test. Closing inside two weeks reads as a well-run business. Taking two months invites questions, no matter how good the underlying numbers turn out to be.
In part 4 of the CEO Optional series, Mike Harvath, Ryan Barnett, and Matt Lockhart look at what happens when the real financial picture of an IT services firm lives only in the owner’s head or their inbox, and what it takes to get it out into a system the whole team can see. They cover the accounting foundations buyers actually check, which operating numbers belong in front of the sales and delivery teams, and the review cadence that makes it stick.
This is a conversation about IT services M&A readiness rather than day to day bookkeeping. Financial visibility is one of the things that separates a business a buyer can underwrite from one that carries an obvious founder dependency discount.
CHAPTERS
0:00 Show open
0:23 Where this sits in the CEO Optional series
0:59 Why founder-led firms end up CEO dependent
3:12 The cost of keeping the numbers in the owner’s head
4:29 Month-end close speed as a maturity test
5:51 The opposite failure: outsourcing too far
7:24 Push the KPIs out to the organization
8:40 What good enough looks like: cash to accrual
11:24 Documented policies and review by outsiders
12:54 Which numbers to put in front of the team
16:50 Teaching the team how the levers add up
21:09 Transparency as a lubricant for the business
23:53 Building a cadence around the numbers
27:23 Forecasting rigor and why it adds value
28:46 Sign-off
KEY TAKEAWAYS
1. A month-end close inside two weeks reads as mature to a buyer. A close that takes two months raises questions before the diligence conversation even starts.
2. The CEO should know revenue and profitability off the top of their head. The bookkeeping and the financial strategy grind belong to a CFO, a fractional CFO, or a strong outsourced partner.
3. Outsourcing too far is its own failure. A founder who cannot demonstrate command of their own numbers in front of a buyer looks just as bad as one who never delegated.
4. Moving from cash to accrual accounting is the key first step toward a GAAP standard, and it usually starts to matter in the three to five million dollar revenue band.
5. Push the operating levers, utilization, realization, and gross margin, out to the sales and delivery teams who can actually move them.
LINKS
Read the companion article: https://www.revenuerocket.com/it-services-ma-financial-transparency-ceo-optional/
What is your IT services business worth: https://www.revenuerocket.com/ev-2-0-2/
Schedule a confidential conversation: https://www.revenuerocket.com/contact-us/
All Shoot the Moon episodes: https://www.revenuerocket.com/series/shoot-the-moon/
Listen on Apple Podcasts: https://podcasts.apple.com/us/podcast/shoot-the-moon-with-revenue-rocket/id1478519505
Listen on Spotify: https://open.spotify.com/show/6y7u9KuOjaplhScHtINGZU
Questions on measuring utilization versus realization: info@revenuerocket.com
ABOUT REVENUE ROCKET
Revenue Rocket is a sell-side and buy-side M&A advisory firm focused exclusively on IT services companies, including MSPs, cybersecurity, cloud, custom application development, and VARs. Based in Bloomington, Minnesota, we have spent 25+ years helping technology services founders buy, sell, and grow.
If you are weighing an exit, an acquisition, or simply what your company is actually worth, schedule a confidential conversation: https://www.revenuerocket.com/contact-us/
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