Quick answer: A client’s CPA is central to a sale. Before the process, the CPA helps prepare accurate, supportable financials and reviews the tax position. During it, the CPA supports diligence, the quality of earnings review and the structure of the deal. After closing, the CPA handles the working capital true-up, the allocation of price and the tax reporting. Clarifying who does what, and whether the CPA is acting as advisor or as valuer, keeps the engagement clean.
Key points
- The earlier the CPA is involved, the more value there is to protect. Tax structure and financial readiness are far easier to influence before a letter of intent is signed.
- Buyers price on adjusted earnings, so the CPA’s records are the base of the price. Month-end closes, reconciled accounts and supported adjustments carry real weight.
- Deal structure drives the client’s after-tax proceeds. The same price can produce different net results depending on the form of the transaction and the allocation of price.
- Define the CPA’s role. Preparing financial information, advising on tax and issuing a valuation opinion are different services with different obligations.
The CPA’s role at each stage
When an owner decides to sell, the CPA is often the first professional they call and the one who knows the numbers best. That position carries responsibilities. A buyer will test every figure, and the quality of the CPA’s work shapes the price, the speed of diligence and the client’s after-tax result.
The work falls into four phases.
| Phase | Typical CPA contribution |
|---|---|
| Before the process | Readiness review, accrual-basis financials, supported adjustments, tax position and entity review |
| Marketing and negotiation | Consistent financial information for the marketing materials, analysis of offers, tax modeling of alternative structures |
| Diligence and signing | Data room support, responses to accounting requests, working capital analysis, review of agreement terms with tax or accounting content |
| After closing | Closing statement review, true-up, price allocation, tax filings, planning for the proceeds |
Before the process: build the foundation
The earnings that buyers pay for come from the client’s books. Several steps raise their reliability.
- Accrual-basis statements. Cash-basis or tax-basis books can hide the pattern of revenue and expense that a buyer needs to see. Converting them gives a clearer picture and shortens diligence.
- A reliable monthly close. Buyers study monthly results, working capital and trends. Timely, reconciled closes show that the numbers can be trusted.
- Separation of personal and business items. Identify and document personal expenses that run through the company.
- A supported adjustment schedule. The add-back guide shows which adjustments buyers accept. Each should trace to an invoice, agreement or payroll record.
- Revenue and margin analysis. Reports by customer, product and period that tie to the ledger.
- Working capital history. Monthly net working capital over several periods, so the client can negotiate the target. The working capital peg guide explains what a buyer will propose.
A sell-side review, sometimes called a pre-sale quality of earnings engagement, tests the numbers as a buyer’s accountants would. The quality of earnings guide explains what the work covers. It finds problems while there is time to correct or explain them, and a buyer is more likely to rely on it if the preparer is independent of the firm that keeps the books.
Structure and tax
How a transaction is structured affects how much the client keeps. The core choice is between an asset sale and a stock sale, and the comparison of the two shows how buyer and seller preferences differ. Related issues the CPA will want to evaluate include the entity type, the client’s tax basis, state and local taxes, the treatment of deferred payments such as earnouts and seller notes, and the allocation of the price among asset classes.
Each of these can change net proceeds, and several depend on facts that are fixed well before a sale. A review of the client’s position before a letter of intent is signed lets the CPA model alternatives and brief the deal team on which terms matter most to the client’s after-tax outcome.
Illustrative example: Why timing matters for structure
A client is offered $14,000,000 for a company. The CPA, brought in only after the letter of intent, finds that the buyer’s proposed structure leaves the client with after-tax proceeds that are $450,000 lower than an alternative the buyer might also accept. The buyer’s willingness to change depends on what it is offered in return, and the leverage the client had before signing is gone. If the CPA had modeled the options before the letter was signed, the client could have asked for the alternative in the first draft. The numbers are invented to show the principle and are not benchmarks.
Diligence support
During diligence, the CPA helps the client respond quickly and consistently. Typical tasks include preparing financial schedules, reconciling statements to tax returns, supporting the adjustment schedule, assisting with the working capital calculation and answering the buyer’s accountants. A single point of contact avoids inconsistent answers. The seller’s diligence checklist lists the requests to expect.
The CPA also helps the client keep the business running. Diligence can take the owner’s attention away from the company, and a dip in results gives the buyer a reason to reopen the price.
Defining the role
CPAs wear several hats in a sale, and the engagement letter should say which one applies.
- Accountant and tax advisor. The usual role: financial statements, tax advice and compliance.
- Financial reviewer. A sell-side review of earnings, which raises independence questions if the CPA also prepares the statements.
- Valuer. An engagement to estimate value falls under the AICPA’s valuation standard.[1] Many firms handle such work through a specialist team or refer it out.
- Deal advisor. Negotiating price and structure is the work of an M&A advisor and attorney. A CPA can inform it with analysis, and should be clear about the limits of the role.
For questions that the client’s tax and accounting position does not answer, such as what the business is worth to buyers, a referral for a transactional valuation gives the client an independent view.
After closing
The work continues after the funds move. The CPA reviews the final closing statement against the purchase agreement, supports the true-up of working capital and debt, helps prepare the allocation of price, files the returns for the year of sale and coordinates with wealth and estate advisors on the proceeds. A client who has a plan for the proceeds before closing is in a better position to follow it. The guide on keeping the client relationship discusses how advisors can work together through the transaction.
Frequently asked questions
Should the CPA who prepares the client’s financials also run the sell-side quality of earnings review?
It is usually better to separate them. A review of financial information prepared by the same firm lacks the independence a buyer looks for, and a buyer may discount it or repeat the work. Some clients use a different firm, or a different team, for the review. Consider independence rules and the client’s interest.
Is the CPA expected to give a valuation opinion?
Not necessarily. If a CPA performs an engagement to estimate the value of a business, the AICPA’s valuation standard applies to the engagement.[1] Many CPAs prefer to refer valuation work to specialists and to focus on the accounting and tax advice. Agree on the role early and put it in the engagement letter.
When should tax planning begin?
Before a letter of intent is signed. After signing, the structure is largely set, and options that depend on entity type, timing or ownership may no longer be available. Early review lets the CPA identify issues and model alternatives.
What happens after closing?
The CPA usually supports the working capital true-up, reviews the final closing statement against the agreement, assists with the allocation of price among assets, prepares tax filings for the year of sale and helps the client plan for the proceeds with other advisors.
A client asking what their business is worth?
The Impetus Group works with CPAs, attorneys and other advisors on transactional valuations and M&A advisory, so the client relationship stays with you. Book a discovery call to talk through a client situation.
Related guides
- Quality of Earnings Report: What It Is and What Buyers Test: A quality of earnings report tests whether a company’s reported profit is real and repeatable. See what buyers examine, how it affects price and how sellers prepare.
- Asset Sale vs. Stock Sale: How Structure Changes Your Proceeds: In an asset sale the buyer picks the assets and liabilities it takes. In a stock sale it buys the owner’s shares. See how each affects taxes, risk and proceeds.
- Net Working Capital Peg: How the Working Capital Adjustment Works: The working capital peg sets the level of working capital a seller must leave in the business at closing. See how it is calculated, negotiated and adjusted.
- When to Refer a Client for a Transactional Valuation: A Guide for Advisors: For CPAs, attorneys and wealth advisors: the situations in which a business-owner client needs a transactional valuation, and when another tool fits better.
- Keeping Your Client Relationship Through an M&A Process: A Guide for Advisors: How CPAs, attorneys, wealth advisors and bankers can stay central to a client’s sale: roles, communication, conflicts and what to ask an M&A advisor.
- What a Useful Valuation Analysis Contains: A Checklist for Reviewing Advisors: A checklist for advisors reviewing a client’s business valuation: scope, normalized earnings, evidence, reconciliation, net proceeds and the warning signs.
Sources
- Statement on Standards for Valuation Services (VS Section 100). AICPA & CIMA. Accessed October 8, 2026.
This guide is general education. It is not a valuation opinion, appraisal, investment advice, or legal or tax advice. How these guides are made.