Right now your accountant has your FY26 file open. Bank feeds reconciled, stock counted, depreciation run, add backs argued over. In a few weeks it gets lodged and you will glance at the profit figure, feel whatever you feel about it, and file the whole thing away.
Do not file it away.
If you sell your business at any point in the next twelve months, the year that just closed is the year a buyer will pull apart hardest. It sits at the front of the three year run they will ask for. It is the year closest to the day they take over, so it is the one they trust most as a predictor. And right now, in August, it is the only one of those three years you can still do anything about.
Buyers read three years, not one
The single most common misread among owners is treating the latest year as the number. Buyers do not. They lay three completed years side by side and look at the shape.
A business at $400,000 of adjusted earnings that ran $310,000 and $355,000 in the two years before it is telling a story a buyer likes. The same $400,000 sitting behind $480,000 and $430,000 is telling a very different one, and no amount of explaining will make a buyer price it the same way. Direction of travel does more work than absolute size, because the buyer is not purchasing last year. They are purchasing next year and the five after it.
This is why a single strong year rarely lifts a price as much as owners hope, and why a single soft year rarely damages it as much as they fear. What matters is whether FY26 confirms a trend or interrupts one, and which of those it looks like depends heavily on how you present it.
Tax accounts and sale ready accounts are the same data with different jobs
Your accountant has spent the year doing exactly what you asked them to do, which is minimise the amount of tax you pay. That is the right job. It is also the opposite job to the one your accounts need to do the day you go to market.
Tax accounts push profit down. Sale accounts show a buyer what the business genuinely earns for its owner. Nothing dishonest happens between those two documents. The bridge between them is the normalised earnings schedule, and building it is the single highest value piece of preparation work there is.
That schedule reverses out the things that belong to you rather than to the business. Your own wage above a market rate for the role. The vehicle that is more family than fleet. Genuine one off costs like a legal dispute that is settled and gone. Private travel, private phone, the boat. Superannuation contributions made for tax reasons rather than operational ones.
The rule that decides whether each of those survives is simple: can you evidence it. An add back with an invoice, a bank line and a one sentence explanation gets accepted. An add back described as roughly twenty grand of personal stuff gets struck out in due diligence, and it takes some of your credibility on every other line with it.
The FY26 write off trap, if you carry plant
This one catches earthmoving, civil, transport, mining services and construction owners more than anyone else, and it is worth understanding before your accounts go anywhere near a buyer.
For the 2025 to 2026 income year, eligible small businesses with aggregated turnover under $10 million could immediately deduct the business portion of assets costing less than $20,000 each, provided the asset was first used or installed ready for use between 1 July 2025 and 30 June 2026. The threshold applies per asset, with no cap on how many assets qualify. You can read the current position on the ATO site at ato.gov.au.
If you spent solidly in the last quarter of FY26, that spend sits in your profit and loss as an expense rather than sitting on your balance sheet as an asset. Your reported profit is lower. Your business is not worse. You are simply holding gear you have already paid for and already deducted.
A buyer working properly normalises all of that out, because capital expenditure and depreciation policy reflect tax decisions rather than trading performance. But they only do it if you hand them the schedule that shows it. Left unexplained, a soft FY26 profit in a plant heavy business reads as a business going backwards at exactly the moment the buyer is deciding what they are willing to pay.
The same logic runs in reverse. If you have been running the gear hard and deferring replacement to protect the profit line, a buyer walking your yard will see the deferred maintenance and deduct it twice: once for the catch up cost, and once for what it suggests about how the rest of the business has been run.
Your own wage is not an expense a buyer accepts at face value
Whatever you pay yourself, a buyer replaces it with the cost of hiring someone to do what you actually do. If you draw $80,000 and work sixty hours a week across quoting, operations and every customer relationship, the honest replacement cost is well north of that, and the gap comes off your adjusted earnings.
If you draw $280,000 for a role the market fills at $160,000, the difference is a legitimate add back and it lifts your earnings.
Neither of those is a trick. Both are simply the buyer working out what the business earns for a normal owner rather than for you specifically. Working it out yourself, in writing, before a buyer does it for you is how you keep control of the conversation.
Working capital is the number nobody thinks about until settlement
FY26 also closed your debtor book, your creditor position and your stock. Buyers and their financiers look hard at all three, because they need to know how much cash they have to put in on top of the purchase price just to keep the business running from day one.
Debtor days stretched from 45 to 70 across the year is a real problem and a fixable one. Stock that has quietly grown because slow moving lines were never cleared is capital sitting in a shed. Creditors pushed out to manage cash tells a buyer something about the trading position you may not want told.
The good news is that August is the ideal month to work on all of it, because you have a full year of fresh data and eleven months before it closes again.
What FY26 looks like in each of my sectors
The same accounts get read differently depending on what you do.
E-commerce and retail. Repeat purchase rate and customer acquisition cost across FY26, not just revenue. A year where revenue held but acquisition cost climbed is a year that needs explaining.
Transport and logistics. The split between contracted and spot revenue, margin by lane, and whether fuel levy mechanisms actually did their job in FY26.
Earthmoving, plant and civil. Utilisation hours against hours available, the forward board at 30 June, and honest market values across the register rather than written down book values.
Construction and building trades. Work in progress treatment, retentions, and whether your QBCC financial requirements were met comfortably or scraped through.
Mining services and supply. Revenue concentration by client, site and commodity, all three cuts, plus where the shutdown calendar sat across the year.
Window furnishings and interiors. Margin by product line rather than blended, the remake rate, and the split between trade and retail revenue.
For the other sectors, toy and hobby retail, turf, and safety consultancy and training, the same principle applies. The accounts are read through whatever drives value in that trade, which is exactly why a generic online calculator gives you a number worth very little.
What to do in the next thirty days
Ask your accountant for FY26 alongside FY25 and FY24 in one comparative view. Start the normalised earnings schedule while the year is fresh and every invoice is findable. Pull your debtor days, your stock position and your asset register with real market values. Then get a confidential appraisal so you know what those numbers actually mean in the current market.
None of that commits you to selling. It costs nothing, nobody finds out you asked, and it turns FY27 into a year you are building toward something rather than a year that simply happens to you.
If you want to know where you stand, book a confidential chat or call 0431 124 128.
Common questions
Should I wait until my FY26 accounts are finalised before talking to a broker?
No. A confidential appraisal can be done off draft figures and management accounts, and doing it now is more useful than doing it in October, because you still have time to influence how FY26 is presented and what FY27 looks like. Waiting for perfect paperwork is how owners lose a year.
My FY26 profit looks low because I bought equipment. Does that hurt my price?
Not if it is explained and evidenced. Depreciation and immediate asset write offs are normalised out when a buyer works to adjusted earnings, because they reflect a tax decision rather than the trading performance of the business. What causes damage is a low profit figure handed over with no schedule behind it, because the buyer then prices what they can see rather than what is actually there.
How many years of financials will a buyer want?
Three completed financial years is the standard request, plus year to date management accounts once you are on market. Some buyers and most financiers will ask for a fourth. If you have only two clean years, that is workable but it narrows your buyer pool and it usually costs you something on the multiple.
Can I still sell if FY26 was a poor year?
Yes, and a soft year that is explained honestly is far less damaging than one that is quietly hoped over. Buyers accept that businesses have hard years. What they will not accept is discovering the reason themselves during due diligence. A documented explanation, ideally with FY27 trading already showing recovery, changes how the year gets priced.
What does a market appraisal actually cost?
Nothing. A confidential market appraisal is free, carries no obligation to list or sell, and nobody finds out you asked. Most owners who get one are twelve months to three years from selling, which is exactly when the information is worth the most.
This article is general information about how buyers assess financial statements in a business sale. It is not taxation, accounting, financial or legal advice, and it does not take your circumstances into account.
Tax settings referred to here, including asset write off thresholds and eligibility, change and are subject to legislation. Confirm the current position with the Australian Taxation Office and your own accountant before making any decision.
A market appraisal provided by a licensed business broker is an opinion of likely selling price based on market evidence. It is not a formal valuation by a registered valuer or a qualified accountant.