Short answer: Before buying a business, ask whether the earnings are real, customers are durable, employees and systems can transfer, contracts are enforceable, working capital is adequate, and the growth story is believable. The goal is not only to find problems; it is to decide whether risks can be priced, fixed, structured around, or should stop the deal.
Buying a business can shorten the path to ownership, revenue, customers, and infrastructure. It can also import hidden risks: weak financials, customer concentration, employee turnover, owner dependency, tax issues, poor systems, or unrealistic growth assumptions.
Alehar helps buyers evaluate targets through Selling/Acquiring Companies: diligence planning, financial review, valuation logic, deal structure, and post-acquisition value creation.
The 11 Questions
Use these questions before signing an LOI and again during diligence with source documents.
| Question | Why it matters | Evidence to request |
|---|---|---|
| 1. Why is the owner selling? | Motivation affects process risk and post-close support. | Seller explanation, owner role, transition expectations. |
| 2. Are earnings supportable? | Price is usually tied to sustainable earnings or cash flow. | Monthly financials, tax returns, QoE support, add-back evidence. |
| 3. How concentrated are customers? | Revenue may depend on a few accounts or relationships. | Customer revenue by month, contracts, churn, renewal history. |
| 4. What do employees know and think? | Staff retention can make or break the transition. | Org chart, tenure, compensation, turnover, employee-review themes, key-person dependencies. |
| 5. Which contracts transfer? | Value can disappear if customer, supplier, lease, or license consents are required. | Material contracts, change-of-control clauses, consents. |
| 6. What working capital is needed? | A profitable business can still require cash after closing. | AR, AP, inventory, deferred revenue, seasonality, cash conversion. |
| 7. What liabilities are hidden? | Tax, legal, employment, warranty, environmental, or compliance issues can transfer risk. | Legal schedule, tax filings, claims, permits, insurance, advisor review. |
| 8. How dependent is the business on the seller? | Owner-led sales or operations reduce transferability. | Customer relationships, approvals, systems, management depth. |
| 9. What growth is realistic? | Upside should be based on evidence, not seller optimism. | Pipeline, retention, pricing, market data, capacity, CAC/payback. |
| 10. How will the deal be financed? | Debt, seller notes, earnouts, and equity affect risk. | Sources and uses, lender requirements, debt-service capacity. |
| 11. What is the first 100-day plan? | Value is won or lost after closing. | Integration plan, priorities, communication plan, KPI dashboard. |
How To Treat Employee Reviews
Search interest around employee reviews is reasonable because culture, turnover, and key-person dependency affect acquisition risk. But public reviews are signals, not proof. Validate themes through management interviews, retention data, payroll records, compensation benchmarks, and post-close transition planning.
People diligence should connect to Alehar's non-financial M&A diligence guidance.
Financial Questions Need Documents
A buyer should not rely only on seller summaries. Request monthly financial statements, tax filings, bank statements where appropriate, revenue detail, AR/AP aging, debt schedules, and support for adjustments.
Alehar's quality of earnings and service-business acquisition guides show how these questions translate into diligence work.
When To Slow Down Or Walk Away
- The seller cannot explain revenue, margin, or cash-flow changes.
- Key contracts cannot transfer or require uncertain consents.
- The owner is the main salesperson, operator, and customer contact.
- Employee turnover is high and the transition plan is vague.
- The purchase price assumes growth that is not backed by evidence.
- Major diligence gaps remain unresolved after using a process like Alehar's M&A due diligence process guide.
Evaluate A Business Before You Buy It
Alehar helps buyers structure diligence, test earnings quality, assess risks, and build a first-100-day value plan before acquiring a business. Contact Alehar before signing an LOI or committing to a diligence timeline.
