A stock count before selling a business: figures a buyer trusts

When a trading or manufacturing business is sold, the buyer asks about the warehouse first. Stock is often a large share of the deal value, so the gap between the book figure and the real one bears directly on the price. If the seller carries out the count in advance, the negotiation rests not on "our figure" but on a documented result. For the terms of the deal, the price structure and tax consequences, always consult a lawyer and an accountant; this article covers only the counting side.

Why the buyer asks about the warehouse first

The warehouse matters to a buyer in three ways: the quantity of stock, its quality and its match with the paperwork. Goods that are on the books but not on the shelf breed distrust and become an argument for a lower price. Expired, damaged or long-unsold goods can also sit on the books at full value. If the seller knows this beforehand, they can explain and value it properly; otherwise the buyer finds it first, and the dispute starts from exactly that point. In pharmacies or building materials, expiry dates and storage conditions raise further questions.

What to prepare before the count

Before the count starts, do the following:

• choose the cut-off date, as close as possible to the stock date in the deal documents;
• show the cost price beside each item in the balance list;
• group goods by condition: normally moving, slow-moving, near or past expiry, damaged, returned;
• set apart goods belonging to third parties (commission, custody), goods in transit and goods reserved for customers;
• compare with the fixed-asset register and list rented equipment separately;
• close open receipt and issue documents.

Much of this is useful even before the count: balances are put in order, the count itself goes faster and differences shrink.

When to carry out the count

The timing depends on the stage of the deal. At the start of negotiations, while the price is not agreed, a count gives a reliable stock figure and helps justify the price. A week or two before the deal it helps to refresh the result, since stock keeps moving. On deal day a short check count can be done together with the buyer; with data from the earlier count it shrinks to a few hours. The terms of the agreement set which of these stages is mandatory, so check with a lawyer.

Why an independent contractor helps

A count run by the seller's own staff is naturally scrutinised by the buyer. An outside contractor writes down the method, keeps the count sheets and photographs and presents the result without a stake in it. Reading those documents, the buyer finds the answers to many questions. Independence helps you as well as the buyer: when someone else announces the result, internal arguments between management and partners shrink too. Since a sale may be confidential, sign a confidentiality agreement with the contractor, while how to tell staff the reason for the count is for management to decide.

How to show the result to the buyer

The report should have at least three layers: a short summary, the method and scope, and an analysis of differences. Do not hide differences, and keep what has been corrected apart from what has not. The buyer often checks by sample, so each item in the report must be traceable to a count sheet and a location. The buyer may ask for a count of their own, so be ready in advance: if your result is orderly, a second count goes quickly and without argument.

A hypothetical example: the book balance is 2.4 billion so'm. The count finds goods worth 2.36 billion so'm, a shortage of 40 million so'm. Of the goods found, 45 million so'm are expired or damaged, so the saleable stock is 2.315 billion so'm. The seller can support all three figures with documents, and the argument is not about the figures themselves but about how to value them.

Conclusion

A count before selling a business does not raise the price but protects it: when a figure is backed by documents, disputes shrink. How to bring the count result into the deal documents is something to settle with a lawyer and an accountant. Inventory acts as an outside party and gives an objective result, a non-disclosure agreement (NDA) is signed with every client, and the results come with an analysis of differences and recommendations.