Questions to ask when buying a business

A seller will tell you why the business is worth buying. Your job is to ask the questions that reveal why it might not be, and to listen as much to how they answer as to what they say. Hesitation, vagueness, or a sudden lack of paperwork on a specific point is often more telling than the answer itself.

These are the questions we'd put to a seller, grouped by the risk areas where small deals go wrong. You won't need all of them on every business, but you should have a deliberate answer to why you're skipping any. Take this list to your next meeting.

Short on time before a first meeting? Run a free SMEInspect Snapshot on the business first. It screens public records so you walk in already knowing what to probe.

Why are you selling?

Start here, and come back to it. The reason for sale frames everything else.

Why are you selling, and why now?
What will you do after the sale?
How did you arrive at the asking price?
Has the business been on the market before? What happened?
Would you consider vendor finance or an earn-out? (A confident seller's willingness to keep skin in the game is a useful signal.)

A seller genuinely retiring tells a different story to one exiting ahead of a problem — a lease expiry, a key customer leaving, a regulatory change, a new competitor. The honest reasons are fine. It's the gap between the stated reason and the evidence that matters.

The financials

You're testing whether the earnings the price is built on are real and repeatable.

Can I see three years of financial statements, tax returns and BAS?
Do the tax returns, the P&L and the bank statements reconcile?
Walk me through every add-back in the normalised earnings.
Which costs will genuinely change under new ownership, up or down?
Was the most recent year typical, or unusually strong or weak?
What's the current-year performance against the same period last year?
Are there any debts, tax liabilities or unpaid entitlements that would transfer?

If a seller can't or won't reconcile the three financial records, treat everything built on top of them as unverified. The detail of how earnings drive the price is here.

Customers and revenue

What share of revenue comes from your largest customer? Top three? Top five?
Are the key customer relationships under contract, and are those contracts assignable?
Do any contracts have a change-of-control clause?
How long have the top customers been with you, and how did you win them?
Have you lost any significant customers in the last two years? Why?
How much of revenue is recurring versus one-off?

Concentration is the quiet killer of small acquisitions. A customer worth a third of revenue who deals with the owner personally is a risk you need a plan for before settlement, not after.

Owner dependence

Walk me through a typical week. What do you personally do?
Who do customers ask for by name?
Who sets prices and wins new work?
What's in your head that isn't written down anywhere?
How long will you stay to hand over, and on what terms?
Will you sign a non-compete? For how long and what radius?

The more the honest answers point back to the owner, the more you're buying a job rather than an asset. That's when the handover and non-compete start to matter as much as the price.

Premises and lease

How long is left on the lease, and what are the option periods?
Is the lease assignable, and what does the landlord's consent involve?
When is the next rent review, and is it market-based?
What make-good obligations apply at the end of term?
Are there any disputes or arrears with the landlord?

For a location-dependent business, an unassignable or near-expired lease can undo the whole deal. Read it before you fall in love with the business.

Staff and suppliers

Can I see the team list, terms, and entitlement and superannuation status?
Who is essential, and do they intend to stay after the sale?
Are employees correctly classified, and are any entitlements outstanding?
Do you rely on any single supplier with no alternative?
Are supplier terms contracted or informal?

Inherited employee entitlements and a sole-source supplier are both liabilities that don't appear on the asking price.

Legal, licensing and reputation

What licences or permits are required to trade, and do they transfer to me?
Is there any current, threatened or past litigation involving the business or you?
Any history of insolvency, payment defaults or director issues?
Are there warranties, guarantees or obligations that would carry over?
How would you describe the business's online reputation, and can I see the reviews?

Much of this is verifiable against the public record without asking the seller at all, so if what they tell you doesn't match what the record shows, that's worth noticing on its own. A free Snapshot runs these checks for you.

The questions about the future

Who are your main competitors, and how do you compete?
What would you do to grow this business if you were staying?
What's the single biggest risk to the business over the next two years?
What's broken or held together with tape that I should know about?

The last two reward a direct seller and expose an evasive one. Anyone who claims there are no risks and nothing broken either doesn't know their business or isn't telling you.

What to do with the answers

Write the answers down, dated, and check the material ones against the documents. The questions that get a confident, evidenced answer, you can park. The ones that get a vague answer, a "trust me," or a promise to "send that through later" go straight onto your due diligence priority list, and your negotiation list too.

That's the loop SMEInspect is built to speed up. The Full Report screens the documents you've gathered, ranks the red flags by severity, and hands you the specific questions still worth putting to this seller, then sense-checks the asking price with the SMEInspect Estimate.

Run a free Snapshot →

General information only — not legal, financial or tax advice. The SMEInspect Estimate is an automated, computer-generated indicative range, not a valuation. Get your own professional advice before you transact.