Buying process
Questions to Ask When Buying a Business: 75 Evidence-Led Prompts
Seventy-five practical questions for sellers, brokers, lenders, and advisers—organized around earnings, customers, people, transferability, liabilities, and closing.
A practical research brief from the Business Buyer Check learning library.
Before Sharing Sensitive Information
Confirm who is representing the seller, the legal name of the business, and how confidential information will be handled. Understand any nondisclosure agreement before signing it. Use secure channels and disclose only what is appropriate for the stage.
- What is the exact legal entity and every trade name?
- Who owns it, and who is authorized to negotiate?
- Why is the business being sold now?
- What information is required from me before the seller releases records?
- How will buyer information and deal data be stored and shared?
Revenue and Customer Questions
Ask for answers by month and customer, not only annual totals. Revenue quality depends on repetition, contract terms, concentration, churn, pricing power, and the cost to serve each customer.
- What are monthly revenue and gross profit for the last three years and current year?
- What percentage comes from the top one, five, and ten customers?
- Which customers are under contract, and can those contracts transfer?
- What revenue is recurring, repeat, project-based, seasonal, or one-time?
- How have pricing, volume, refunds, discounts, and churn changed?
- Which relationships belong personally to the owner?
- Are any customers currently late, disputed, or at risk?
- What pipeline is included in the forecast, and how is it documented?
- Have any major customers been lost since the last financial period?
- What customer data, consent, or privacy restrictions affect transfer?
Earnings and Add-Back Questions
Ask the seller to bridge claimed SDE or EBITDA to reported profit line by line. The question is not whether an expense sounds personal; it is whether the cost is documented, nonrecurring, and unnecessary for the buyer.
- How is advertised cash flow defined?
- Which tax return and financial-statement lines produce the starting profit?
- What is each add-back, when was it paid, and where is support?
- Which owner duties must be replaced, and at what market cost?
- Which expenses have been deferred or unusually low?
- Are there related-party rents, wages, purchases, or sales?
- What working capital is required during the slowest period?
- Which capital expenditures are needed in the next 24 months?
- How do bank deposits and merchant statements reconcile to revenue?
- Why do tax returns, internal statements, and the listing differ?
Employees and Owner Dependence
A profitable company may not be transferable if the owner holds the license, relationships, technical knowledge, approvals, or daily operating role. Test what happens on day one without the seller.
- What does the owner do by day and by week?
- Who can operate the company during the owner’s absence?
- Which employees are essential, and have they been informed?
- What are tenure, compensation, benefits, bonuses, and accrued obligations?
- Are workers classified as employees or contractors, and why?
- Are there wage, overtime, leave, benefit, immigration, or workers’ compensation issues?
- Which licenses or credentials are held by individuals?
- What retention arrangements may be needed?
- Are there open positions or reliance on temporary labor?
- What training, introductions, and availability will the seller provide?
Operations, Suppliers, and Technology
Look for single points of failure. A vendor, machine, software account, telephone number, domain, or undocumented process can be as important as a customer contract.
- Which suppliers are sole-source or difficult to replace?
- Are rebates, exclusivity, credit terms, or allocations transferable?
- What inventory is slow-moving, obsolete, consigned, or customer-owned?
- Which equipment is owned, leased, financed, or near replacement?
- What maintenance and downtime history exists?
- Which processes are documented?
- Who owns the website, domain, phone numbers, code, content, and data?
- What cybersecurity incidents, backups, access controls, or insurance claims exist?
- Which systems cannot be transferred to a new owner?
- What permits, inspections, or certifications are operationally essential?
Lease, Property, and Environmental Questions
The business may be worth little without its location. Review assignment, term, options, escalations, common-area charges, guarantees, use restrictions, repair duties, and environmental allocation.
- Can the lease be assigned, and does the landlord have approval rights?
- How much term and how many options remain?
- What are total occupancy costs after CAM, taxes, insurance, and escalations?
- Is a new personal guarantee required?
- Who owns improvements, fixtures, and equipment?
- Are zoning and permitted use consistent with current operations?
- Have spills, releases, remediation, notices, or environmental assessments occurred?
- Are tanks, hazardous materials, wastewater, emissions, or waste permits involved?
- What repairs or code upgrades could a transfer trigger?
- Is real estate included, optional, or separately owned?
Legal, Tax, Licensing, and Public Records
Seller disclosures are only one input. Search official sources under exact legal names and relevant individuals, then resolve identity matches and record limitations.
- Is the entity active and in good standing?
- What UCC financing statements, tax liens, judgments, or other claims exist?
- Which payoff letters and releases will be required?
- What lawsuits, administrative actions, complaints, or investigations are pending or historical?
- Are taxes filed and paid in every required jurisdiction?
- Which licenses require transfer, new application, background review, or qualifying personnel?
- What OSHA, DOL, EPA, FMCSA, or industry-regulator records exist?
- What insurance claims, exclusions, lapses, or nonrenewal notices exist?
- Are intellectual-property registrations and assignments complete?
- Have data privacy, consumer protection, or cybersecurity notices occurred?
Deal Terms and Closing Questions
Convert answers into conditions and allocation of risk. A verbal promise is not a closing deliverable.
- Is this an asset or equity sale, and why?
- What assets, contracts, cash, inventory, and working capital are included?
- Which liabilities are assumed or excluded?
- How will inventory and working capital be measured at closing?
- What seller note, earnout, escrow, or holdback is proposed?
- What representations, indemnities, and survival periods are appropriate?
- Which third-party consents are closing conditions?
- What happens if performance changes before closing?
- How will liens be paid and releases delivered?
- What will be re-verified immediately before funds move?
Questions for Your Own Advisers
Ask advisers to explain the decision implication, not only identify an issue. Coordinate legal, tax, accounting, financing, insurance, and technical work so gaps do not fall between disciplines.
- Which findings can change price, structure, or closing conditions?
- Which liabilities may survive an asset purchase?
- What tax elections and allocations need negotiation?
- What evidence is still missing or stale?
- Which specialists are required for environmental, licensing, benefits, cybersecurity, or real estate?
Frequently Asked Questions
What should I ask first when buying a business?
Start with the legal entity, reason for sale, owner’s actual role, definition of stated earnings, recent performance, customer concentration, and what must transfer for operations to continue.
How do I know whether the seller’s answers are true?
Match material answers to tax returns, financial records, contracts, payroll, bank or merchant evidence, official public records, and third-party confirmations where appropriate.
When should I stop a deal?
Pause when a material claim cannot be reconciled, required records are withheld, financing or transfer assumptions fail, or exposure cannot be understood, insured, remediated, priced, or allocated.
Should I send this entire list at once?
No. Stage requests based on materiality and deal progress. Start with documents needed to validate economics and transferability, then expand around the risks found.
This educational material is preliminary decision support, not legal, tax, accounting, lending, appraisal, or investment advice. Requirements and transaction terms vary; verify current rules with qualified advisers and official sources.
Your next diligence questions
Continue Your Research Path.
These guides address the issues most closely connected to this topic.