Interim financials

Definition

In-house financial statements covering the months since the last tax return.

Why It Matters

Deals close mid-year, so the freshest numbers are always unaudited ones, and lenders require them anyway because a tax return from last spring cannot show what the business is doing now. A seller who cannot produce them within a few days is telling you something about the bookkeeping you are buying. Read them against the same months last year rather than against the annual return, and expect them to be tidied up: internally prepared statements are where optimism lives.

In numbers: A CIM built on last December's numbers is stale by June. Diligence asks for interim financials, the year-to-date P&L and balance sheet, and a lender wants them current within about 60 days of underwriting. A $40,000 revenue slide hiding in the interims is exactly what they exist to catch.