Buying a Business: Six Due-Diligence Questions
Before buying a business, you need to understand more than its asking price. You need evidence that explains the operation, the obligations you would inherit, and the work required after closing.
These six questions organize an acquisition review into practical areas. Each leads to supporting questions and records to request. They are a starting framework, not an exhaustive checklist or a substitute for financial, legal, tax, or specialist advice. Prioritize the material risks of the actual business; several areas may need to be reviewed in parallel.
1. Can the financial story be verified?
Ask for financial statements and underlying records covering a period that captures the business’s trading pattern. Understand the accounting basis before comparing figures.
How do sales and expenses reconcile with marketplace reports, bank activity, invoices, and tax information?
What explains seasonality, unusual transactions, refunds, or changes in margin?
Which proposed profit adjustments are supported, and which costs would a new owner still incur?
Have an accountant document differences and assess the quality of earnings. A fixed percentage tolerance cannot establish whether the records are reliable. Our P&L review guide explains the distinction between reported profit and operating cash.
2. Can the business keep using its sales channels?
Review current account health, policy notices, listing restrictions, product requirements, and the history of material issues. Verify applicable marketplace rules directly rather than relying on an old checklist of thresholds.
Are there unresolved account warnings, product complaints, or intellectual-property disputes?
Who owns the brand assets, and what permissions or approvals does the proposed transaction require?
What must happen for the business to continue operating after the change in ownership?
Do not assume accounts, listings, contracts, or brand permissions transfer automatically. Confirm the proposed route with the relevant platform and qualified advisers.
3. Is inventory and supply continuity funded?
Connect the stock records to the cash plan. Confirm quantities, condition, location, ownership, incoming orders, and outstanding supplier balances—not just the inventory value on a spreadsheet.
Which suppliers and products does the business depend on?
What deposits, order minimums, production lead times, and freight commitments apply?
What replenishment funding is needed after closing, and who provides it?
For example, a shipment marked “in transit” still needs supporting documents and a realistic arrival plan. Supplier alternatives and larger orders may have benefits, but their cost and feasibility need to be established.
4. What supports demand and marketing performance?
Look at where customers come from and whether the economics support the sales. Review advertising reports alongside total revenue, product costs, fees, returns, and creative quality.
How dependent are sales on advertising, discounts, or a particular listing?
What evidence supports the claimed performance of each channel?
Which improvements are testable, what would they cost, and who would do the work?
Low advertising spend is not automatically untapped growth. Better photography, new campaigns, or new products are hypotheses until tested; do not treat them as guaranteed acquisition upside.
5. Where is the business concentrated or owner-dependent?
Map reliance on individual products, suppliers, platforms, people, and relationships. Identify the consequences if a key dependency changes.
How much revenue and profit rely on the largest product or channel?
Which tasks and relationships currently depend on the seller?
What happens if demand falls, costs rise, a shipment is delayed, or a listing is restricted?
Turn each material concern into an explicit decision: obtain more evidence, establish a mitigation, change the proposed terms, or decline to proceed. A risk label alone does not resolve the underlying issue.
6. Are the deal and transition responsibilities clear?
Ask why the seller is selling and compare the explanation with the records. Review what is being purchased, what is excluded, and which obligations remain with each party.
What are the purchase conditions, payment obligations, and required approvals?
What transition support will be provided, by whom, and for how long?
Who handles operating decisions, inventory funding, reporting, and unresolved issues after closing?
The SBA’s business-buying guidance emphasizes thorough investigation and considering professional help. Have the relevant advisers assess the proposed agreements and financing. A lender’s decision, an attractive payment structure, or a short timeline does not replace your own review.
Keep one decision record: evidence received, unanswered questions, responsible person, and conditions still outstanding. Angora’s acquisition process connects sourcing and due diligence with ongoing operating work. Start an acquisition application to share your budget, experience, and goals. The application begins a fit review; it does not provide a public deal list or guarantee acceptance or returns.
