Financial Due Diligence in Cedar Rapids, Iowa

A guy in Hiawatha almost bought a lawn care route last spring. Forty accounts, good trucks, seller wanted $180,000 and had a printed profit and loss showing $240,000 in revenue. It looked clean. He asked us to check it before he signed.

Nine of those forty accounts were one customer, a property management company, and that contract was up for renewal in four months. Thirty-one percent of the revenue was sitting on a deal that might not exist by summer. The seller had not lied about anything. He just had not mentioned it.

The buyer went back and renegotiated to $128,000. That is what this work is for. Not catching a crook, because most sellers are honest. Knowing what you are actually buying before the money moves.

Accounting Services in Cedar Rapids for Business Buyers

Financial due diligence is a short, focused review of a seller's records before you commit. We do it for buyers across the Cedar Rapids area, usually on small service businesses.

Most people looking at their first acquisition around here are buying something they already understand. A lawn care route. A cleaning contract book. A detail shop. A small framing outfit whose owner wants to retire. They know the work. What they cannot judge is whether the numbers behind it hold up.

Our accounting services in Cedar Rapids cover both sides of that. The review before you buy, and the outsourced accounting that keeps the books straight once you own it. Both quoted flat, before anything starts.

The Three Questions a Review Answers

Everything we look at rolls up into three questions. Most buyers only ask the first one.

Is the revenue real

Real means the money actually landed. We match the profit and loss to the bank statements, month by month, across twelve to twenty four months. It is common to find revenue on the P and L that never hit an account, usually because somebody was recording invoices as income instead of payments.

Is anything missing

Unpaid vendors. An equipment loan nobody mentioned. A lease with two years left. Payroll taxes owed. Customer deposits taken for work not yet done, which is the one that catches people, because that money is already spent and the work still has to be delivered.

Will it happen again next year

Revenue that came from one big job, one large customer, or the owner personally knowing half the town is not revenue you inherit. It leaves with him. This is where the Hiawatha deal turned.

What We Check

Five things, in this order, on a typical small service business.

• Bank to book matching. Every month should tie. Where it does not, we find out why.
• Customer concentration. Share of revenue from the top one, three and five accounts, plus when those contracts renew.
• Owner add-backs. The truck, the phone, the family health insurance. We separate what is genuinely personal from what you will keep paying.
• Working capital. What it takes to run day to day. If customers pay in sixty days and vendors want thirty, you need cash to cover that gap from week one.
• Off-book liabilities. Equipment loans, personal guarantees, unpaid payroll taxes, deposits held against future work.

On a business that bids jobs rather than billing hourly, we also look at whether the pricing works. Plenty of small operators bid on gut feel and never track true cost once labor burden is added. Payroll taxes, workers comp and equipment time usually add 18 to 32 percent on top of the wage. A business can look profitable overall while half its jobs lose money and the good ones carry the bad.

How a Review Runs

Start to finish is usually under a week on a small business, assuming the seller cooperates.

Day one, the call

Fifteen minutes. You tell us what you are looking at, what the seller has handed over, and where you are in the process. We tell you whether a review is worth doing and quote it flat.

Days two and three, the records

We work through bank statements, the accounting file, tax returns and whatever contracts exist. Most of this happens without you.

Day four or five, the summary

You get a written summary. What we found, what it means for the price, and the specific questions we would put to the seller. Written so you can hand it to a lender or an attorney without translating it first.

When to Bring Us In

Timing matters more on this than on anything else we do.

The right moment is after you have a price in principle and before you sign anything binding. Early enough that what we find can still change the deal, late enough that you are not paying to review a business you were never serious about.

The wrong moment is after closing, which is when about half the calls come. At that point it stops being due diligence and becomes a bookkeeping cleanup, because you now own whatever was wrong.

What Happens After You Close

Buyers usually inherit a file nobody has kept properly for years. That is normal and it is fixable.

We rebuild the history so your first year has something to measure against, set the file up correctly in QuickBooks Online, and put reporting in place from month one rather than year two. If the business bids work, we set up job costing so you can see profit by job instead of guessing.

Most buyers then stay on monthly bookkeeping at a flat fee, so the first year goes on learning the business rather than learning accounting software.

Who This Fits, and Who It Does Not

It fits you if

You are buying a small service business in the Cedar Rapids area, the seller has given you numbers, and you want somebody independent to test them. Typical deals here run from $50,000 to about $500,000.

It does not fit if

You need a formal valuation for a court or a partnership dispute, which is CPA work. You need an audit, which is also CPA work. Or the seller has refused to share bank statements, in which case there is nothing to review and that refusal is your answer.

Why Cedar Rapids Buyers Choose Us

We have no stake in the deal closing

Brokers get paid when it closes. We do not. If the business is solid we will say so plainly, and if it is not you hear that before you sign.

A flat quote before we open anything

You know the cost before the work starts, which matters when you are already spending money on a deal that might not happen.

We speak in plain language

The summary is written for you, not for another accountant. If you have to look up three words per paragraph, it is a bad summary.

Working Across the Cedar Rapids Area

Deals we review are usually within about thirty minutes of Cedar Rapids.

That covers Cedar Rapids itself, plus Marion, Hiawatha, Robins, Lisbon, Mt Vernon, Ely, Swisher, Springville, Bertram and Covington. The service area page has the full list.

Local seasonality matters when you are timing a purchase. Lawn care and landscaping money floods in April through October and goes quiet in winter. Buy a route in March and you are funding six months of payroll before the good money arrives. That is not a reason to walk away, but it should be in the plan.

What Financial Due Diligence Costs

It is a project with a fixed price, not a monthly service. Three things set the number.

• How many months of records we review, usually twelve or twenty four
• How many bank, card and merchant accounts the business runs
• How organized the seller is, because a clean file goes fast and a shoebox does not

Most reviews on a small service business run a few days. Ongoing pricing after the deal is published on the pricing page.

Getting Started

It starts with a free fifteen-minute call. Tell us what you are looking at and where you are in the process. We will tell you honestly whether a review is worth doing and what it would cost.

Call (319) 382-9017 or use the contact page. You get a real reply within one business day.

What Else We Handle

If you are further along than the buying stage, these are the places to look.

Questions Cedar Rapids Buyers Ask