Financial statements are the report card on the financial performance of your assisted living facility. Larger facilities and bigger operators are often required to have audited financial statements to satisfy lenders, investors and funding sources. But what about smaller providers? Are audited financial statements necessary?
Audited financials statements aren’t necessary, unless you have a contractual obligation to provide them to someone. But they can be very helpful, especially when you’re thinking about selling your assisted living facility.
If you’re selling an assisted living facility, the potential buyers are interested in the building, the people and the opportunity. But they’re really interested in your numbers (and so is their appraiser and lender). The financial statements inform the buyer about how much they can afford to pay, how much money they can borrow, and how much opportunity may be in it for them.
Can we trust your numbers?
That’s the question most buyers are thinking if they’re not actually asking. And your ability to answer that question with an emphatic “YES” can make your property more valuable. Here’s why.
Audited financial statements lower a buyer’s risk.
When a buyer receives audited financial statements from a seller, they can rely on the accuracy of those financials more than if they come directly from the seller. They also have greater assurance that the financials were prepared using generally accepted accounting principles, so that they can make an apples to apples comparison with other properties.
Buyers use the historic financial statements from a seller to help decide what price to pay. They also use financial statements from prior periods to show their lender that the assisted living facility will be able to support their proposed debt service, or support their plan to return a property to profitability (if it isn’t already).
The seller’s financial statements for an assisted living facility are important to a buyer, and audited financials often make these important documents worth their cost.