Business figures become useful only when you know what they measure, where they come from and which costs or risks they omit. Sound decisions connect reported earnings with cash flow, investment needs and the purchase price.
Practical example
A domain name may generate leads, but confirm who owns it, whether it transfers and who holds rights to the website content and tools.
What to check before moving forward
Intangible assets
Brand, domain name, software, data and customer relationships may carry value but also transfer restrictions. Verify ownership, licences, access rights and third-party dependencies.
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.
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.
Valuation methods
Do not treat one valuation multiple as a definitive appraisal. Consider sustainable earnings, assets, risk, growth prospects and genuinely comparable transactions before forming a value range.
What exactly changes hands?
Establish exactly what is being acquired: shares in a company, specified assets or an operating business unit. Put the transaction perimeter in writing, including clear inclusions and exclusions.
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:
- Trademarks, domains and digital rights
- Verified access to analytics and digital platforms
- Anonymised revenue by customer
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.