The questions to ask when buying a business are not only about the answers. It’s what is not said, non-verbal clues, and the temperament of the business owner. The questions below are meant to open the conversation up and learn things about the company that can’t be found on financial statements and tax returns. Questions should be asked in a way that is non-threatening and conversational. Your goal is to learn more about the business and establish the respect and trust of the business owner. This will serve you well in getting the company’s best terms and orderly transfer. The following are questions you may ask, but don’t make it an interrogation, as the business owner may become defensive and overly guarded about their responses.
Sample Questions to Ask When Buying a Business
• What year was the business started?
• Has it been for sale or purchased before?
• What are the greatest strengths and most significant challenges of the business?
• Why are you selling the business?
• Are you in discussions with other potential buyers?
• Can I review the company’s tax returns from the past three years?
• What are the revenues and net profits from the past three years?
• Does the business have debts, liabilities, or accounts past due?
• How was the asking price for the business calculated?
• Which assets are included in the price?
• Is the price of the sale negotiable?
• Is the business involved in any ongoing lawsuits?
• What are the company’s current contracts?
• What zoning or industry regulations affect the business?
• Who are your biggest competitors?
• How does your business distinguish itself?
• What is the target market for the business?
• Is that market growing, stable, or shrinking?
• Does the company own any intellectual property, proprietary processes, or exclusive products?
• Does the company own or lease its location/s?
• What are the terms of the mortgage or lease?
• Does the business own or lease its equipment?
• What types of insurance policies are in place?
• Who are the key employees?
Buying a business is a process that requires due diligence. Due diligence is a process of discovery where you look at all aspects of the company before buying. Asking thoughtful questions is one of the most potent tools in due diligence. Learn more about due diligence by clicking here.