We are currently working on a project for a company that has two distinct divisions contained within one set of financial statements. One division is doing well and growing steadily, while the other division is perfecting a concept that may be truly revolutionary in their space. The second division may have exponentially greater market value than the first and ownership has been approached by some large national companies interested in potentially buying the division. Ownership has never formally separated the shared costs for the two divisions. We are working with the company’s finance group to do the separation in order to make a meaningful presentation to buyers. As one might imagine, it will be far easier to divide the current year and more challenging (and require more resources) to go back in time. We would recommend instituting divisional accounting to any business at the earliest possible stage. Divisional accounting is an excellent way to monitor the profitability of new initiatives and down the road can help the company demonstrate to buyers which divisions are most valuable. Click Here to Email Jeff @ Beacon Greg DeSimone had a similar topic in his most recent Desimone on Deals video: Clean Books. Watch Now.
