A business acquisition should never be based solely on a seller's presentation or headline financial figures.
The right questions help reveal how the business actually operates, what creates its revenue, where the risks lie and what the buyer will inherit after completion.
Key Areas to Question
Questions About the Business
- How does the business make money?
- What are its main products or services?
- Who are its main competitors?
- What makes it different?
- How long has it operated?
- Why is the owner selling?
Financial Questions
- What has revenue been for the last three years?
- What are the gross and net margins?
- What are the major operating expenses?
- How much working capital does the business require?
- Are there outstanding debts?
- Are there unusual or one-off expenses?
- What are the current management accounts showing?
Customer Questions
- Who are the largest customers?
- What percentage of revenue comes from the largest customer?
- How long do customers typically remain?
- Are contracts recurring?
- Can contracts be transferred?
- What is the customer acquisition process?
Operational Questions
- How does the business operate day to day?
- Which processes depend on the owner?
- What systems and software are used?
- Who manages suppliers?
- What operational problems currently exist?
- What would need to change after acquisition?
Employee Questions
- How many employees are there?
- Which employees are essential?
- What is employee turnover?
- Are there outstanding employment issues?
- What are total employment costs?
- Are contractors used?
Legal Questions
- Are there current disputes?
- Are there pending claims?
- Who owns the intellectual property?
- Are important contracts transferable?
- Are there regulatory obligations?
- Are there outstanding liabilities?
Questions for the Seller
Ask direct questions about the seller's motivation and expectations.
- Why are you selling now?
- How long have you been trying to sell?
- Have other buyers made offers?
- What would you do differently if you retained the business?
- What are the biggest risks?
- What does the buyer need to know that is not obvious from the accounts?
Questions About Future Opportunities
- Where could the business grow?
- Which markets have not yet been developed?
- Could prices be increased?
- Are there untapped customer segments?
- Are there new products planned?
- What investments would be required?
Ask for Evidence
Questions are most useful when the answers can be supported by appropriate documentation.
If the seller says revenue is growing, review the financial evidence. If the seller says customers are loyal, examine retention data where available. If the seller says there is substantial growth potential, ask what evidence supports that conclusion.
Buyer Question Checklist
- ✔ Understand the business model.
- ✔ Verify financial performance.
- ✔ Investigate customer concentration.
- ✔ Understand operations.
- ✔ Review employees.
- ✔ Investigate legal obligations.
- ✔ Ask why the owner is selling.
- ✔ Understand future opportunities.
- ✔ Request supporting documentation.
- ✔ Record unanswered questions.
Frequently Asked Questions
What should I ask a seller first?
Start with the business model, financial performance, reason for sale, customers, operations and major risks.
Should I ask why the owner is selling?
Yes. The reason for sale can provide useful context, although it should be considered alongside independently verifiable information.
Should all questions be asked before making an offer?
Not necessarily. Some information will normally be examined during formal due diligence. However, material commercial and financial questions should be understood before making significant commitments.
What if the seller refuses to answer?
Ask why the information cannot be provided and whether it can be supplied later under appropriate confidentiality arrangements. Material unanswered questions should not simply be ignored.
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