The 5 Must-Dos When Considering Buying Any Business

By Michael D. Rubin, CEO & Founder · Updated September 2026 · 730 words

Before buying any business, do five things: confirm exactly what is being sold, measure how the business really performs, study the financial records, test the plan for its future, and understand its customers and competitors. Excitement about a company makes it easy to skip one of them. Each exists because buyers who skipped it came to regret it.

Your advisors will do much of this work alongside you, but the judgments are yours. Treat the five checks as the minimum before you put a number on paper. They also give you the questions to raise with the seller before the offer, which is when answers cost the least.

1. Confirm what is being sold

Do not assume. List what is included and what is excluded: equipment, vehicles, inventory, real estate, customer contracts, intellectual property, the company name, phone numbers, websites, cash and receivables. Sellers sometimes plan to keep a truck, a building or a favorite customer relationship, and buyers learn this late. Ask for the list in writing and attach it to the letter of intent, so both sides work from the same inventory.

Establish, too, whether you are buying the company's assets or its shares, because that decides which past liabilities come with it. This guide on selling assets or ownership interests explains the difference from the seller's side.

2. Measure real performance

Reported profit is only a starting point. How many hours does the owner work, and what would it cost to replace that work with a hired manager? Are key employees paid at market rates, or will they need raises to stay? Is there deferred maintenance on equipment or facilities? Adjusted earnings, the figure after adding back owner-specific or one-time costs, should be tested line by line, because each add-back is a claim about the future. See how add-backs affect a company's value.

Look at timing as well. A strong year that ended with a burst of one-time orders, or a weak year caused by a single lost account, can distort the picture. Monthly results across three years show patterns that an annual total hides.

3. Study the financials

Potential is not bankable; earnings are. Most buyers need a loan, and lenders lend against current cash flow. Review three years of profit and loss statements, balance sheets and tax returns, and reconcile them to bank statements. Check receivables for slow payers, inventory for obsolete stock, and liabilities for anything that does not appear on the balance sheet.

If the numbers cannot support the debt you will carry, either the price or the business is wrong. Talk to a lender early about acquisition financing, so you know what the earnings must look like before you fall for a company.

4. Test the plan

Ask the owner what the business was working toward: new services, hires, equipment, locations. A written business plan is a bonus; many owner-run companies never had one. What matters is whether there is a believable path forward and what it would cost to follow. Ask which parts of that path the owner already started and how they went, and what capital spending the plan assumes. A route to growth that needs new trucks, a larger facility or a second shift is one you will have to pay for. Growth ideas should inform your strategy after closing, not the price you pay today.

5. Understand customers and competition

Learn who buys, why they stay and how concentrated revenue is. Look at retention across several years and at the share of revenue that comes from the largest accounts. Ask what customers would do if the company raised prices or changed ownership. Then look outward: which competitors are expanding, which are new, and who is cutting prices. A loyal customer base facing a new, well-funded competitor is a different business from one facing none, even if this year's numbers look the same. Where you can, read public reviews and talk to suppliers; both see the company from angles the seller may not.

Where MDR & Associates fits for buyers

When MDR & Associates represents a seller, buyers receive a confidential marketing package and a financial recast that address most of these checks before the first meeting, which lets serious buyers move quickly. Buyers register, sign an NDA and provide a financial profile first, and every offer is presented to the seller in person. Begin at our buyer page.

Where this fitsBuy a business in Texas →

Questions owners ask next

How long should I spend evaluating a business before making an offer?

Long enough to complete these five checks at the level the available information allows, often a few weeks once you have the marketing package and financials. Detailed verification happens in due diligence after the letter of intent. Moving too slowly can cost you a company that has other interested buyers.

What do buyers most often overlook?

The owner's real role. Buyers often underestimate how many relationships, decisions and hours sit with the owner. If that work has to be replaced by a manager or by you, the true earnings are lower than they look, and the transition plan becomes one of the most important terms in the deal.