Buying a business
A Closer Look at 3 Major Factors to Consider When You Buy a Business
Three factors buyers underestimate: whether a business you like will actually pay, the costs outside the price, and outside opinions.
By Michael D. Rubin, CEO & Founder · Updated September 2026 · 699 words
Three factors deserve a closer look before you buy a business: whether the company is viable and not merely appealing, what it will really cost beyond the purchase price, and what trusted outsiders can see that you cannot. Many disappointing acquisitions trace back to one of the three, and each is easy to check if you look before you commit.
Factor 1: Appeal is not the same as viability
Buyers fall for businesses: a brewery, a marina, a shop they have been a customer of for years. There is nothing wrong with enjoying what you own. The risk is letting the appeal stand in for the numbers. A viable business earns enough, reliably, to pay its debt, pay you a fair salary and fund its own needs, with something left for bad years.
The opposite mistake is buying something profitable that you will dislike running. Work you dread wears you down, and it shows in how the company is led. The best purchase sits where solid earnings meet work you can commit to for years. If you have to choose, choose viability, then find what you can enjoy in it.
A quick test helps. Take the earnings the seller reports, subtract a market salary for the job you will do, subtract the yearly loan payments you expect, and see what is left. If the answer is thin in a normal year, a single bad year could put the business, and your savings, at risk.
Factor 2: The costs that do not appear in the price
The purchase price is only the entry ticket. Add these before you decide what you can afford:
| Cost | Why buyers miss it |
|---|---|
| Working capital | Cash for receivables, inventory and payroll is needed on top of the price |
| Replacing the owner | If the owner did several jobs unpaid or underpaid, you may need to hire for them |
| Deferred maintenance | Equipment, vehicles and buildings the owner stopped investing in before the sale |
| Financing costs | Loan fees, interest and personal guarantees add to the true cost |
| Professional fees | Attorney, CPA, quality of earnings review, appraisals and insurance |
| Transition | Months of learning, customer visits and possible staff turnover after closing |
How to find the hidden costs before closing
Walk the premises with someone who knows the equipment. Ask for several years of maintenance and capital spending; a sharp drop just before a sale is a signal. Compare the owner's pay and hours with what you would pay a manager to do the same work. Build a monthly cash forecast for your first year, including loan payments, and see how it holds up if revenue dips. Our answer on why sales fail in due diligence shows which surprises tend to surface late.
Talk to lenders early, too. The loan structure and any seller note change your monthly cash needs, and our page on business financing outlines the usual options.
Factor 3: Get a second opinion, and a third
Professional advisors are your first line of defense. An attorney, a CPA who has worked on acquisitions and, where it helps, someone who knows the industry will each see risks you miss. Do not rely on the seller's side for that view; their job is to present the company well. Choose advisors who are paid for their advice rather than for the deal closing, so their incentive is to tell you when to walk away.
Personal opinions matter too. People who know you well, such as a spouse, a mentor or a close friend, can tell you whether this business fits your temperament, your family's needs and the life you want. They will not judge the financials, but they may notice when you are talking yourself into something. Buying a company changes your days, your finances and often your family's plans, so their view counts.
Where MDR & Associates fits
We represent owners, so on any company we sell we are on the seller's side, and we say so from the first call. Buyers still benefit from how we run a sale: the company comes with a financial recast, organized records and an owner prepared for hard questions. To see the companies we bring to market, start at our buyer page.
Where this fitsBuy a business in Texas →
Questions owners ask next
How much should I set aside beyond the purchase price?
It depends on the business, its seasons and how you finance it, so there is no reliable rule of thumb. Build a month-by-month cash forecast for your first year with a CPA, including loan payments, working capital, deferred maintenance and professional fees, then add a cushion for a slower start than you expect.
Should friends and family see the company's financials?
Generally no. You will have signed a confidentiality agreement, and sharing the seller's details breaks it. Talk to people you trust about the kind of business, the hours and the risk you are taking on, without identifying the company. Keep the financial review with your professional advisors, who are bound to confidentiality.