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?