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As A Business Buyer What Questions Should I Ask The Seller?

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Comments & Replies: 2     Views: 4249     Posted By: Peter Siegel MBA  Peter Siegel MBA: BizBen Founder, ProBuy/ProSell Program Director



Topics: Buying A Business     Tags: buying a business



This is a great question. Before I answer it I want to stress the importance of doing your due diligence when buying a business. You will probably never make a bigger and more consequential purchase in your life. Making a bad decision when buying a business can be disastrous for both you and your family. Making sure you know everything there is to know about a business before you buy it is the number one priority should have.

Asking the seller straightforward questions and getting straightforward answers in return is an important part of the due diligence process. Here are some of the questions you should be asking during meeting with the buyer and his or her team of professionals:

1. Why did you get into this business in the first place? What excites you about it?

2. What is your day-to-day role in the business?

3. What would your ideal transition look like? What do you want to do post-sale?

4. What would be your expectations of a buyer?

5. What problem does your company solve for your customers? Why do your customers buy from you rather than others?

6. Can you walk us through the entire process of your service/product line from sourcing to distribution to serving the end customer?

7. Other than you, who are the leaders/executives in the company? What are their current and potential roles?

8. How long have your employees been with you, and why do they stay?

9. What types of problems arise in your business (external and internal)? Who deals with them, and how?

10. At what capacity level do you currently operate? What capital expenditures should be made in this business annually, and on what?

11. What opportunities exist in this market through the next three, five, or 10 years?

The answers you get from these questions will help guide your decision.


There's always room for more questions:

12. What mistakes have you made and how can I avoid repeating them?

13. Who have you found to be your best business and professional resources for advice and counsel? Why? Will they be available to me?

14. What are your personal relationships with your suppliers? Your customers? How dependent is future business dependent on transferring and maintaining those relationships? How likely is it that those relationships will or will not continue once you are out of the picture?

15. Have you thought about any contingency plans for the business (a "Plan B") if the market and economy don't evolve as we both hope they will? What are those plans?

16. How is your intellectual property protected? Do you rely on trade secrets? Are logos and business names trademarked? Are written, visual, and audio advertising, promotional, operational materials copyrighted? Are inventions patented?

17. Do your financial records reflect ALL of your business finances? Is there any income "off the books"? Are there any expenses "off the books", either paid with cash or personally by you, not through the business?

18. How available will you be and on what terms to assist or mentor me in taking over the business? For how long?


  Helpful Resources To Assist In Selling And Buying California Businesses
Ranvir S. Sandhu, Esq. - Legal Services For Buyers And Sellers

I've worked at top Bay Area law firms and have extensive experience with business entity formation, mergers, dissolutions, conversions, employment matters, including experience in reviewing and negotiating transactional documents such as leases and purchase agreements.

Mark Chatow, Esq.: Legal Services For Buying, Selling Businesses

Mark has a broad range of small business purchase & sale experience from analyzing potential acquisition targets to successfully guiding buyers and sellers through the purchase & sale of small businesses. Mark can assist with contracts, negotiations, legal matters, etc. Reach Mark at 949-478-8393.

Janet Carrera - Escrow & Bulk Sale Services - SF Bay Area

Redwood Escrow Services, Inc. is a full service, licensed independent escrow company. We are EAFC Fidelity bonded, fully insured & licensed with the Department of Corporations. Committed to offering our clients the most comprehensive variety of escrow services available. Phone Janet at 510-247-0741.

Brad Steinberg, Broker - Laundromat Specialists

PWS is the leading laundromat broker in California. Since 1968 PWS has brokered over 2,500 laundromat sales. With over 90 employees dedicated to the coin laundry industry, PWS has 18 licensed agents, a 3 person in-house finance department, 10 service technicians and a 20 person parts department.

Joe Sandbank, Esq. - Legal Services

I have provided legal counsel to business buyers, sellers and brokers for over 17 years. With prior experience as a business broker and SBA loan officer, Joe brings both a practical and legal approach to all aspects of the business acquisition process.

Diane Boudreau-Tschetter: Escrow And Bulk Sale Services

California Business Escrow, Inc. is a full service independent escrow company serving all of California and has expertise in a wide range of escrows. Our team prides itself on providing an exceptional escrow experience. For more info phone Diane Boudreau-Tschetter at 888-383-3331 or 209-838-1100.

Elizabeth McGovern: Escrow Services - SF Bay Area

McGovern Escrow Services, Inc., is a leading independent escrow company. We are a trusted partner with our clients, assisting them through the tangled bulk sale & liquor license transfer process. We provide attentive, quality & innovative customer service. Phone Elizabeth McGovern at 415-735-3645.

Helen Yoo: Escrow & Bulk Sale Services - Southern California

New Century Escrow, Inc. is a fully licensed & bonded independent escrow company. Over 20 years combined experience in handling bulk escrow transactions. Multi-lingual staff that speaks your language, including Korean, Chinese, Vietnamese. Call Helen Yoo direct at 626-890-1151.


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