My company has never had its accounts audited: should I audit them before selling, and does that change the price or the timing of the deal?

Quick answer

Capittal's view: if your company is not legally required to be audited, Spanish law does not require you to audit it in order to sell. But if you plan to sell within 12 to 24 months, auditing the latest financial year or, at least, preparing a financial vendor due diligence usually shortens the deal and reduces the discount the buyer applies for uncertainty. An audit does not raise the multiple on its own; what protects the price is reaching the negotiation with EBITDA, net debt and working capital explained and defensible. If the company was already required to be audited and was not, that is a liability to fix before going to market.

Is my company required to have its accounts audited?

Article 263 of Spain's Companies Act (Ley de Sociedades de Capital) exempts from audit companies that, for two consecutive financial years and at each year-end, meet at least two of the following conditions:

Criterion	Limit to stay exempt (current text)
Total assets	No more than 2,850,000 euros
Annual net turnover	No more than 5,700,000 euros
Average headcount	No more than 50 employees

A bill currently going through Parliament, which brings in the EU update of company size criteria, proposes raising the asset and turnover limits by around 25%. Check with your adviser which figures apply to the financial year you are about to close. There are also mandatory audit cases unrelated to size, for example when minority shareholders request one under article 265.2, or when sector rules or public grant rules require it.

What if I should have been audited and was not?

Then it is not an option, it is a liability. If the company exceeded the thresholds and filed its accounts without an audit report, the buyer will spot it in due diligence, because it is one of the first things it checks. Beyond the formal consequences at the Companies Registry, it signals disorder, and the buyer turns that into more questions, more warranties and more pressure on price. The sensible move is to regularise before going to market: appoint an auditor and audit at least the latest closed financial year.

If I am not required to, what makes sense: audit, vendor due diligence or limited review?

• Voluntary audit: an auditor gives an opinion on whether the accounts present a true and fair view. It adds credibility to historical figures, but does not analyse recurring EBITDA or net debt for pricing purposes.
• Financial vendor due diligence: analyses what drives the price: normalised EBITDA and one-off adjustments, net debt and debt-like items, and normal working capital. It anticipates the buyer's questions.
• Limited review: a narrower engagement than an audit. It gives some comfort on the figures with less depth and in less time.

They are not mutually exclusive. In many mid-market sales the most efficient combination is an audited latest year plus a vendor due diligence focused on quality of earnings.

What do private equity funds ask for, and what do trade buyers ask for?

Private equity funds tend to be more demanding on financial information: they commonly ask for audited accounts and commission their own financial due diligence, partly because the banks financing the acquisition require it too. Trade buyers are sometimes more flexible if they know the sector well, but they will still run their own review and, if the figures are unaudited, they will dig deeper. Either way, unaudited accounts do not prevent a sale; they make the review longer and harder.

How much longer does the deal take if I audit just before selling?

Auditing a closed financial year takes weeks or months, depending on the size of the company and the state of its books, and a first-time audit also requires reviewing opening balances. If it is done at the last minute and the report comes back qualified, it can backfire: the buyer now has a documented problem and uses it to renegotiate. That is why it is better to audit with time to spare, fix whatever comes up and go to market with a clean report.

Does it change the price I will be paid?

An audit does not raise the multiple on its own: the buyer pays for sustainable EBITDA, growth and business risk. What it does is reduce the uncertainty discount and, above all, the risk of price chipping, the price cut that arrives after due diligence, when the buyer already has exclusivity and the seller has fewer alternatives. Audited figures and a normalised EBITDA explained upfront make the initial offer look much more like the final price.

What is the next step if I want to sell in one or two years?

First check whether you are required to be audited under the thresholds in force. If you are not and you plan to sell within 12 to 24 months, audit the latest closed year or, at a minimum, prepare a financial vendor due diligence before launching the process. The NRRO group covers the accounting, tax and legal side of that preparation. This article is for guidance only and does not replace advice on your specific case.

Capittal Transacciones is an M&A mid-market boutique advising deals from 3 to 250 million euros from eight offices across Spain (Barcelona, Madrid, Girona, Lleida, Tarragona, Palma de Mallorca, Zaragoza, and Valencia), part of the NRRO group. Every deal is led directly by a partner, from the first conversation to closing. If you are thinking about selling, request a free, confidential valuation.