Two businesses with the same asking price may call for very different checks. Regulation, customers, employees and seasonality vary by industry. A sector-specific checklist is therefore more useful than a generic price comparison.
Practical example
An online store dependent on paid traffic may lose profitability if advertising costs rise or a platform changes its rules.
What to check before moving forward
Digital performance metrics
For an online business, check traffic sources, sales quality, platform dependence, returns and advertising costs. Screenshots and headline revenue do not guarantee future performance.
Customer concentration
Examine customer mix and reliance on a few major accounts. High revenue can be fragile if it depends on a single contract or the outgoing owner's personal relationships.
Real operating margins
Analyse margins by product or service and their trends, not just overall sales. Input costs, wages, returns and discounts may erode profitability.
Continuity of contracts
Review important contracts, including expiry, change-of-control and assignment provisions. Continuing a customer, supplier or lease relationship may depend on specific contractual terms.
Due diligence before signing
Request supporting documents and test the claims made in the listing. A review commonly covers accounts, contracts, employment, tax obligations, licences and material legal risks.
How to use this guide
Start by requesting sources for each important claim and noting what remains unverified. Cross-check answers against records, visit the operation where appropriate and bring material risks to an adviser before committing. Never fill missing financial figures with your own assumptions.
Evidence worth requesting before you proceed
A sales description is a starting point, not proof. These documents help distinguish verifiable facts from expectations:
- Verified access to analytics and digital platforms
- Recurring contracts and customer churn
- Trademarks, domains and digital rights
Request information appropriate to the negotiation stage and respect confidentiality arrangements. Sensitive documents may be shared only after a buyer is identified.
Final takeaway
A sound transaction starts by defining what changes hands, checking the facts and documenting the agreement. Use this guide as a map of questions, not a replacement for a review tailored to the actual business.
General information only; not personalised legal, tax or financial advice. Rules depend on the transaction and may change.