When looking for a business to purchase, most prospective buyers have an initial list of qualifying questions they ask an owner of a business in which they have interest. In addition to this baseline information, buyers may use the first couple of meetings or calls to get a clearer understanding of the business and to assess its risks and upside aspects.

COMMON QUESTIONS BUYERS SHOULD ASK SELLERS:

• What qualities, abilities, and skills does the new owner of the business need to be successful?
• What is your relationship with your suppliers?
• What are the prospects for the company’s future growth? Industry trends?
• What is your customer mix? How diversified is your customer base?
•  How are decisions being made internally?
• Who are your employees? Explain their roles and contribution. Will they stay under new ownership?
• What economic trends have worked against you in the past?
• How many competitors do you have, what are your competitors doing better than you?
• Is there any seasonality or predictable variability in demand for your product/goods/services?
• Are there any pending legal, environmental issues.
• Why are you selling the business? What will you do after the sale?
• What are your primary goals in the sale? Do you want to protect the employees, gain maximum price, have a role in the business post-transaction?
• What do you stand to lose by not completing this transaction?
• What is your time-frame for completing the sale?
• Have you already been approached by, or are you already in discussions with, other buyers?

While the buyer will be asking the owner questions, the buyer will also be sizing up the owner.  It is important that the owner size up the buyer as well, doing the homework necessary to know the baseline facts about the buyer and be ready to ask questions to understand their motives, their credibility, and their perspective. Do they have enough capital? Do you know their vision?