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
A factory with strong orders may still require substantial machinery or maintenance investment that reduces returns for the buyer.
What to check before moving forward
Equipment and assets
Check ownership, condition and realistic value of equipment, property and other assets. Separate operationally essential items from extras, and investigate liens or financing arrangements.
People and employment obligations
Understand who performs critical tasks, what know-how sits with employees and what happens after ownership changes. Review contracts, costs and possible employment obligations with specialists.
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.
Debts and liabilities
Distinguish liabilities that remain within a company from those that may arise in an asset or business transfer. Contractual risk allocation does not automatically extinguish legal duties owed to third parties.
Working capital
Working-capital needs can change month to month. Review receivables, payables, inventory and balances, and agree how working capital will be adjusted at closing.
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:
- Environmental permits and waste-management records
- Maintenance history and deferred investment
- Operating procedures and reliance on the owner
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.