Considerations When Selling…Or Buying

This article was originally published by Deal Studio on April 5, 2016.

Important questions to ask when looking at a business…or preparing to have your business looked at by prospective buyers.

  • What’s for sale? What’s not for sale? Does it include real estate? Are some of the machines leased instead of owned?
  • What assets are not earning money? Perhaps these assets should be sold off.
  • What is proprietary? Formulations, patents, software, etc.?
  • What is their competitive advantage? A certain niche, superior marketing or better manufacturing.
  • What is the barrier of entry? Capital, low labor, tight relationships.
  • What about employment agreements/non-competes? Has the seller failed to secure these agreements from key employees?
  • How does one grow the business? Maybe it can’t be grown.
  • How much working capital does one need to run the business?
  • What is the depth of management and how dependent is the business on the owner/manager?
  • How is the financial reporting undertaken and recorded and how does management adjust the business accordingly?