A qualified buyer will do many things to “triangulate” the sales and expenses you originally provided (perhaps on a P&L you supplied).
Balance sheet — Do the account balances on the balance sheet match your revenue/expense claims?
Tax Return — Does your tax return match? Hint: Should match EXACTLY what you told them. They’ll ask for 2–3 years.
Bank Statements — They’ll ask for 12 to 36 months of bank statements, add up all the deposits and all the debits and see how they match what you claimed.
If you’re working with an experienced buyer, supported by an experienced advisor and you try to fake them out on the numbers you’re pretty much screwed. If things don’t match up within a few percent, you face a LOT of explaining and likely a 20% to 40% discount in their original offer, because they can’t trust you. The quickest way to unravel a deal is flaky numbers. I’ve saved multiple clients hundreds of thousands of dollars NOT buying businesses where they couldn’t prove whether they were really making money or not.
Moral: Keep your books like your business was for sale every day and like every buyer is an experience auditor. Leave NO doubt that the revenue is real and that the expenses are real, and that the difference went into the bank account.
Hope this helps!