Ask Better Questions, Buy Better Businesses
A prepared buyer learns more in one good conversation than from any listing sheet. The questions below are designed to surface the things that determine whether a business is a smart acquisition: the reality behind the numbers, how dependent it is on the owner, and where the risks hide. Ask them directly, and pay as much attention to how the seller answers as to what they say.
Get a confidential consultation on finding, valuing, and financing the right acquisition — from a broker who works with buyers every day.
Questions About the Financials
- Can you show me three years of tax returns, P&Ls, and bank statements?
- How do you calculate SDE, and what are the add-backs?
- Is revenue recurring or one-time, and what's the trend?
- What percentage of sales is cash, and how is it recorded?
- Are there any debts, liens, or liabilities I should know about?
Questions About Why They're Selling
- Why are you selling, and why now?
- What would you do differently if you were staying?
- What's the biggest challenge the business faces?
- Are you open to a transition period or seller financing?
A credible reason for selling (retirement, health, a new venture) is reassuring. Vague, shifting, or evasive answers are a red flag worth pursuing.
Questions About Customers and Revenue
- Who are your largest customers, and what share of revenue do they represent?
- How long have key customers been with you, and why do they stay?
- Are customer relationships with the business or with you personally?
- How do you get new customers, and what does that cost?
Questions About Operations and People
- What do you personally do day to day, and how many hours?
- Which employees are essential, and will they stay?
- What happens to the business if you're out for a month?
- Are systems and processes documented, or in your head?
- What's the status of the lease, licenses, and key contracts?
These answers reveal owner dependency — often the single biggest factor in whether the business is truly transferable.
Questions About the Future
- Where is the growth, and what's held the business back?
- Who are the main competitors, and how do you compare?
- What capital investments are coming (equipment, remodel, technology)?
- What would you want a new owner to know that isn't in the numbers?
Answers That Should Worry You
Watch for answers that don't add up: reluctance to share financials, "trust me, there's a lot of cash off the books," a reason for selling that keeps changing, or an admission that customers really buy because of the owner personally. None of these automatically ends a deal, but each one is something to verify hard in due diligence. The seller's transparency is one of the best early signals of whether a deal will hold together.
Frequently Asked Questions
What questions should I ask when buying a business?
Ask for three years of tax returns, P&Ls, and bank statements; how SDE and add-backs are calculated; why the owner is selling; who the largest customers are and what share they represent; whether relationships are with the business or the owner; what the owner does day to day; which employees are essential; and the status of the lease, licenses, and contracts.
What should I ask about why the owner is selling?
Ask why they're selling and why now, what they'd do differently if staying, the biggest challenge the business faces, and whether they'll offer a transition period or seller financing. A credible reason such as retirement is reassuring; vague or shifting answers are a red flag to investigate.
How do I find out if a business depends on the owner?
Ask what the owner does day to day and how many hours, what happens if they're out for a month, whether key relationships are personal or belong to the business, and whether processes are documented. Heavy owner dependency means revenue may leave when the seller does.
What seller answers are red flags?
Reluctance to share financials, claims of significant unrecorded cash income, a reason for selling that keeps changing, and admitting customers stay because of the owner personally. These don't automatically end a deal but must be verified thoroughly in due diligence.
Evaluating a Business to Buy?
Martin Navarro helps buyers ask the right questions and read the answers that matter. Let's talk about the business you're considering, confidentially and with no obligation.
Request a Buyer Consultation Call or text: 818-633-3254 · 365navarro.martin@gmail.com