Buying a business
5 Elements for Buyers to Investigate
Five things to verify before you buy a business: your own fit, the plan, the owner's workload, the customer base and records that reconcile.
By Michael D. Rubin, CEO & Founder · Updated September 2026 · 699 words
Before you buy a business, investigate five things: whether it suits you, whether its plans have matched its results, how much the owner personally carries, how its customer base is spread, and whether the financial records agree with each other. Enthusiasm is natural at the start. Due diligence, the buyer's detailed check before closing, is where you set it aside and test every claim.
The table gives a quick view of what to ask for and what should worry you. The sections after it explain each element.
The five elements at a glance
| Element | What to ask for | What should worry you |
|---|---|---|
| Your fit | Time on site and conversations with people in the industry | You like the idea of owning it more than the daily work |
| Plan versus results | Past budgets or goals and the actual results for the same years | No plan at all, or targets missed year after year without explanation |
| Owner workload | A written outline of the owner's week and responsibilities | Every key relationship and decision runs through the owner |
| Customer base | Revenue by customer for the last three years | A few accounts make up most of the revenue |
| Financial records | Tax returns, profit and loss statements, balance sheets and bank statements | Figures that do not reconcile, or reluctance to share bank statements |
1. Your own interest and fit
People do build successful companies in industries they have no passion for, but it is harder. You will spend long days with this company's customers, staff and problems. If the work bores you, staying committed through a difficult year will take more than the income. Spend time on site if you can, talk to people who work in the trade and be honest about whether you want this job, not just the return.
2. The plan and the owner's workload
Ask whether the owner set goals or budgets in past years and how the results compared. A company that planned and mostly delivered shows discipline. One that has never planned is not necessarily a bad buy, but you will be building that habit from scratch.
Then look at how hard the owner works. If the profit depends on the owner working most evenings and weekends, that is the job you are buying, or a manager's salary you will have to pay, which lowers the real earnings. Find out whether anyone can run things when the owner is away, and test it by asking what happened during the owner's last vacation.
3. Who the customers are
Get revenue by customer for at least three years. If a handful of accounts make up most of the revenue, losing one could change the whole business. That is customer concentration, and it affects both the price and the financing a lender will offer. Our answer on how customer concentration affects value explains how buyers usually treat it. Look also at how the company wins new customers. If growth has come from one relationship or the owner's personal network, plan how you will replace it.
4. Financial records that reconcile
Once your offer is accepted and due diligence begins, ask for tax returns, profit and loss statements, balance sheets and bank statements covering the same periods, and check that they tell the same story. Revenue on the tax return should match the books, and bank deposits should support both. Differences sometimes have good explanations, but you need to hear them and have your CPA confirm them. Our answer on the financial statements a valuation needs lists the core documents.
Many buyers also pay for a quality of earnings review, in which an accounting firm tests whether the earnings the seller reports are real and repeatable. Lenders look hard at the same numbers; our page on business financing covers how a purchase is usually funded.
What MDR & Associates does on the seller's side
We represent sellers. Before a company we sell reaches buyers, we build a financial recast that shows adjusted earnings and ties back to the tax returns, so your reconciliation starts from a clean base. You still need your own CPA and attorney. To understand how our sales run or to ask about a company you have seen, contact us.
Where this fitsBuy a business in Texas →
Questions owners ask next
When should a buyer see bank statements?
Usually after a letter of intent is signed and due diligence begins. Before that, sellers share summarized financials under a confidentiality agreement. Bank statements are the strongest proof that revenue is real, so a seller who refuses them during due diligence gives you good reason to slow down or walk away.
What is a quality of earnings review?
It is an independent accounting review of the seller's reported earnings. The accountant tests revenue, expenses and the adjustments the seller made to see which profits are real and likely to continue. It costs money, but it often finds issues that change the price or structure, and it gives lenders more confidence.
Is a business without a written plan a bad purchase?
Not automatically. Many profitable owner-run companies have never written a formal plan. What matters is whether the owner can explain how the business makes money, what has changed over time and where growth could come from. You can introduce planning after closing; hidden problems are much harder to fix.