Daily Law Group
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Answer these important questions before buying a business

Many entrepreneurs with a vision start a business from scratch. Others, however, purchase an existing business as it gives them the opportunity to hit the ground running.

Regardless of size, industry or cost, buying a business is an important decision. You need to know exactly what you're getting, because any mistake you make early on could cost you time and money down the road.

While there is no shortage of questions to answer before buying a business, these 15 are among the most important:

  • Why is the business for sale?
  • What is the history of the company, including its start date, revenue, founders and any key milestones?
  • Is revenue on the rise or fall?
  • Can you provide me with the past three to five years of tax returns?
  • Are you okay with the idea of me speaking directly with your accountant or accounting department?
  • Can you explain the current debt that the company is carrying?
  • Do you have any existing relationships in place with lending institutions?
  • What is the business structure?
  • Is the company currently involved in a lawsuit, or has it run into legal troubles in the past?
  • What current contracts do you have in place, and is it okay for my legal team to review them?
  • Can you provide more insight on the current state of the industry and what you see happening in the future?
  • Who are your primary competitors, and how much market share do you have at this time?
  • Can you share your sales and marketing plan, including what has and hasn't worked in the past?
  • What assets are included in the sale of the business, such as real estate, equipment, supplies and intellectual property?
  • Can you provide a comprehensive overview of your employment structure, including the number of employees, employee growth or decline and other key metrics?

Buying a business may be the best decision you ever make, but you don't want to get so excited that you forget to do your due diligence.

There are many questions to answer before buying a business, with each one extremely important to formulating a strategy for moving forward. As long as you understand what you're getting, how to proceed and how to protect your legal rights, you can methodically move through the process.

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