Buying a business
7 Essential Questions to Ask Before Buying a Business
Seven questions to put to any seller before you buy, why each one matters, and which answers should make you slow down.
By Michael D. Rubin, CEO & Founder · Updated September 2026 · 719 words
Before buying a business, ask the seller seven things: the biggest challenges the company faces, how the asking price was set, whether there are legal issues, how well the financials are documented, what skills it takes to run, how much it depends on a few customers or suppliers, and what happens to the employees after the sale. The answers tell you the real value, the real risks and whether you are the right person to own it.
The table sets out each question, why it matters and which answers deserve a closer look. The sections after it cover how to ask and what to do with what you hear.
The seven questions
| Question | Why it matters | An answer that needs a closer look |
|---|---|---|
| What are the biggest challenges the business faces? | Shows the work waiting for you and where improvement is possible | There are none |
| How did you arrive at the asking price? | Tells you whether the price rests on earnings or on hope | A figure based on what the owner needs to retire |
| Are there legal issues, claims or disputes? | Lawsuits and disputes can follow the business or its assets | Vague answers, or issues that surface only in diligence |
| How are the financials documented? | Clean records support the price and your financing | Books that do not match the tax returns |
| What skills does it take to run the business? | Shows whether you can step in or must hire | The owner holds licenses or know-how nobody else has |
| How dependent is it on key customers or suppliers? | Concentration can turn one lost account into a crisis | One customer or supplier accounts for a large share |
| What happens to the employees after the sale? | People often carry the relationships and the know-how | Key staff have side promises from the owner |
Ask the price question carefully
An asking price should rest on the company's earnings, usually its adjusted cash profit, and on a multiple that reflects its risks and growth. A seller who can walk you through that logic, or whose advisor has prepared a financial recast that does, is showing you something real. A seller who names a number because it is what they need for retirement is telling you about their plans, not the business. Our answer on how advisors set a realistic asking price explains the usual method, so you can test it.
Keep the tone curious, not accusing. You want the reasoning, and you want the seller still willing to talk to you afterwards.
Listen to how the seller answers
The manner matters as much as the words. An owner who names real challenges and explains what they tried is usually an owner whose numbers you can trust. One who deflects, promises to send something later and never does, or blames every problem on someone else is giving you information too. Write each answer down right after the meeting while it is fresh, and mark what you still need to verify.
Turn every answer into a due diligence task
Each answer belongs on your due diligence list, the checks you and your advisors complete before closing. If the seller says there are no lawsuits, your attorney confirms it. If the seller says the top customer has been loyal for years, you ask for that customer's revenue history and, later, a conversation with them. Due diligence is step eight of a professionally run sale, and your questions shape it.
Employees deserve particular care. Ask whether pay, benefits and roles will continue, and whether anyone has been promised a bonus or a share of the proceeds if the company sells. Promises nobody wrote down become your problem after closing.
Build the financing around what you learn
Lenders ask many of the same questions, especially about documentation and customer concentration. Clear answers make financing faster; weak ones may lead a lender to reduce the loan or ask for more equity or a seller note. Our page on business financing describes the structures most buyers use.
How MDR & Associates prepares sellers for these questions
We represent sellers, and we prepare every owner to answer these questions directly, with documents to back the answers. That makes the process faster and more honest for buyers too. If you are considering a purchase and want to know how our sales run, contact us.
Where this fitsBuy a business in Texas →
Questions owners ask next
Should I ask these questions before or after a letter of intent?
Ask the broad versions in early meetings, before any offer, so you know whether the business is worth pursuing. The detailed proof, such as contracts, customer records and tax returns, usually comes after a letter of intent, during due diligence. Early answers shape your offer; later documents confirm it.
What if the seller refuses to answer a question?
Ask why. Some details, like customer names or individual salaries, are reasonably held back until later to protect confidentiality. A refusal to discuss legal issues or how the financials are kept is different. If it continues into due diligence, treat it as a serious warning and consider walking away.