We'll no doubt hear our share of falsehoods before this month's federal election is over, but it can also be pointed out that they are capable of being discovered during the course of deciding what a business is worth.
For a start, the accounting profession has some ability to hide the truth or at least to make the financial assessment of a business more difficult than it perhaps ought to be.
In addition, the appraisal process involves various assumptions that may not be as correctly or as judiciously made as they need to be.
There's a saying that figures don't lie, but, in my opinion, Mark Twain had the right measure of them:  they don't necessarily tell you the truth.

To explain myself, let me first hasten to say that I am not referring to the distortion of results that have rocked the business community, to say nothing of the reputation of prestigious accounting firms, in the recent past -- and are seemingly still being uncovered by the Security Exchange Commision people and similar authorities.  Rather, I'm thinking of the accepted practices that leave many of the figures in financial statements insufficiently explained. As many business courses like to emphasize, some skill is required in order to read a Balance Sheet and make sense of an Income Statement.  In effect, neither immediately suggests what a business is worth to a buyer thinking of purchasing it.
In turn, the fact that a business has been running successfully is no guarantee that, under new ownership and a change of management, the results will be the same.  They may be no different or they may be better -- or they may be worse.  There are several assumptions that have to be made before any realistic predictions of the future can be made -- and before a decision to buy the business can be taken with sufficient confidence.
Suppose, then, we consider some points that aren't always apparent when a company's financial statements are being examined.

To start with, although the Balance Sheet usually shows the present book value of a company's assets, these will have first appeared at their original cost, which will have since been depreciated year by year and by now may have even been reduced to NIL.   Thus, the figures may fall far short of the current market value of the assets, some of which may have been improved and almost always by updates and upgrades that have been charged away in preceding Income Statements.  Moreover, some consideration has to be given to the asking prices of alternative sources of plant and equipment.  In other words, what it was possible to buy for $1000 yesterday is, more than likely, not going to be obtainable for the same amount today.  Clearly, some adjustments need to be made in deciding what a company's assets are truly worth.
At the same time -- and, as it were, on the other side of the ledger -- some scepticism regarding the Accounts Receivable figure is often warranted.  The issue of an invoice isn't automatically followed by a payment and, given the economic volatility of the marketplace nowadays, some debts may never be collected.  By extension, too, the generally held view that Receivables should be at least sufficient to cover Payables may be at risk.  Thus, the apparently strong liquid position of a company may not be quite what the figures suggest.
The Liabilities portion of the Balance Sheet also deserves some attention.  Mortgages may not be assumable, verbal loan agreements may not, ahem, be worth the paper they were written on, and, heaven forfend, there may be items missing because the present owners have refused to honour them for one reason or another.
In any event, it can be said that unquestioned acceptance of a company's Balance Sheet is ill-advised.  At most, it's a true picture only as far as the existing management and financial advisers perceive it to be.

When it comes to the Income Statement, there's sense in recognizing that it's essentially an historical record.  As such, it isn't necessarily a reliable forecast of the future, which may be affected by changes from the ways in which the business has been run hitherto.  In fact, it's important to realize that the figures follow a formula of Actual Revenue less Actual Expenses equals Actual Profit, all three of which can fall -- and, in enlightened financial management circles, are intended to fall -- under the aegis of what's called Budgetary Control, an approach whereby the traditional formula is turned on its head so it becomes Required Profit equals Anticipated Revenue less Allowable Expenses.
Indeed, although it perhaps isn't a perfect analogy, the upsets that often follow the appointment of a "turn around" artist (or "hatchet man" as he/she is sometimes called) have this basis:  a critical rejection of the past and the application of rigorous controls and actions that ensure a desired level of results.
In any case, it isn't altogether safe to assume that customers will still order the product, that expenses will stay more or less the same, and that profitability will continue the way it has done in the past.  Moreover, while better marketing, better buying, and increased productivity are accepted methods for increasing margins, they aren't always accompanied by a retention of customer, supplier, and employee loyalties.  Business can be lost as well as gained because of changes in the equilibrium.
Apart from everything else, there's a need to look at the existing condition of plant and equipment.  It isn't uncommon for longtime owners to run things into the ground instead of constantly updating or upgrading them, let alone maintaining them to a satisfactory standard.  A jaundiced belief that major replacements may become necessary isn't without some merit.
And perhaps not the least, a change of ownership can lead to a loss of personal relationships and a network of contacts that may not look as favourably on a business under new management as was previously the case.  In fact, we have only to pick up on my opening reference to the political arena, to realize that neither Paul Martin nor Stephen Harper can absolutely depend on the loyalties and support their predecessors enjoyed!

All in all, then, it can be argued that taking over an existing business calls for some caution.
There are undoubted benefits in picking up where someone has left off.  There's a momentum that can ensure success more readily -- and quickly.  There's a measure of what has happened in the past that, all other things being equal, stands a good chance of continuing into the future.  There are fewer -- if any -- of the unknowns that a brand new business has to face.  In effect, the risks involved are nicely contained.
Nevertheless, it pays to do some number crunching that goes well beyond adding two and two together.  If nothing else, there's need to find out if the answer really is four.  The object of an effective exercise in due diligence is to make sure it isn't five instead -- and, if it is, to value the business accordingly, and never mind what the present owner thinks it is.