An area of great concern to our business selling clients as we help prepare them for a buyer visit is what questions the buyer is likely to ask. Below are a representative set of questions that we have encountered. This article will not provide you with the answers because they will vary with each business seller. However, we will provide a buyer motivation framework so that you can answer the questions with this common framework in mind.



Buyers want to eliminate as much risk as possible because an acquisition, by its very nature is a risky business decision. A buyer does not want to discover or be confronted with a bunch of Gotcha's after the check has cleared.

As a seller, you must never convey the attitude of this place is falling apart and you can't wait to dump this dog. Your reasons for selling are very important and should focus on estate planning considerations, retirement and diversifying my assets or my favorite, we just do not have the resources to take advantage of all the market potential that we have created.

Another theme is that you want to convey how strong your staff is. You want to portray how the account relationships are managed by multiple staff members. You need to communicate just how widespread the intellectual property is dispersed among the staff. The owner has an easy job because the employees handle all of that.

Future potential and momentum are important. Make sure you can articulate the opportunities for growth that you have identified, and are either pursuing now or are planning to pursue if you had more resources. So keeping these themes in mind, be prepared to answer many of the following:

Why are you selling your business?

What are the last three year's net operating profits?

Who are your biggest competitors?

What are your industry ratios and trends?

What do you think I can do to increase sales and profits?

Why are you not doing to increase sales and profits?

Will you hold financing for the purchase of the business?

Will you be willing to stay with the business for a period of time after the sale?

Will you agree to a covenant not to compete?

Will the business sale include the transfer of real estate?

Don't you have children to transfer your business to?

Do you want a corporate stock sale or asset sale?

Who knows that the business is for sale?

Who will I be negotiating with?

What is your timetable for completing the business sale?

What do you do everyday?

Do you anticipate any problems with me getting credit from your suppliers?

Do any of your suppliers represent more than 10% of your purchases? If yes, who are they?

What is it that you like best and least about the business?

What do you believe is the profile of the ideal buyer for this business?

What can be done to build the business?

How long will it take me to really learn this business?

How long can I count on you to train me after the sale?

What keeps you up at night about the business?

What are the details of the lease? How long? Any options? Do you anticipate any problems with the landlord assigning it to me or entering into a new lease?

How much vacation do you take (not that you're looking for time off, rather you want to know if they have adequate staff that will allow you time away)?

Are you the only owner?

Who are the employees? Any manager in place? Are there any employees that are critical to the business?

Are you willing to finance part of the purchase? If not, why?

Net revenue seemed to experience a huge decline last year versus previous years. What happened?

How much of the revenue is the owner responsible for?

How much of the revenue are the other business development people responsible for?

What are the titles and responsibilities of each of the employees? Please state how long each has been with the company and what they are being paid, and how they are being paid. If they have success-based compensation please let me know the actual for the past three years for each person.

What are their revenue production goals? Other goals?

What does their five-year plan look like going forward?

Why is the owner selling the business?

Can I see actual P&L statement for the last five years?

Is there one person in house today that would be interested in and capable of running the day-to-day operation while keeping up personal production and receiving an override and perhaps equity stake in the business?

Is the owner open to an acquisition plan that would be tied into continued success of the firm over the next five years?

Do the employees have non-compete agreements with the company? If so what is the nature of the non-compete? If not, why not?

Is the current owner willing to sign a non-compete agreement as part of the acquisition?

What is the owner's salary, bonus, fees, and commissions on an annual basis and over the last five years?

How much of the business are we likely to lose if the current owner retires or discontinues affiliation with the company? How would the owner propose to mitigate the loss for a new owner?

This list is by no means exhaustive and there may be questions that arise that are unique to your particular business or industry. However, if you can answer these questions with an awareness of the buyer's risk mitigation approach, your firm will be viewed as a better acquisition target. We are in no way suggesting that your answers are not truthful, we are just suggesting that you surround them with an attractive packaging.

Any answers that are found to be inaccurate during the due diligence process will result in punitive adjustments to purchase value.

If you remember the old interview question, "What would you say is the biggest negative about your business approach?" Your positive answer was something like, "Well, I am so driven to be successful that I am sometimes impatient with people that do not share my same drive or capability." That's how we are suggesting you approach this. So for example, you have lost a few deals to XYZ Big Company. How will that impact the business going forward? Well, the competition from the XYZ Company is a good news bad news situation. The bad news is that they are a very tough competitor, but the good news is their attention to our space reinforces our view of the long term potential. How's that for positive?