M&A Deal Points | The first interaction between buyer and seller

When a potential buyer first reaches out, the tone is usually friendly and informal; sharing backgrounds, exchanging stories, and getting to know each other. This rapport-building stage is an important first step. But once trust begins to form, the conversation naturally shifts to more serious ground.

If you’re a business owner considering a sale, here are some key questions buyers are likely to ask early in the process, and why they matter:

• How did the business start?
  Buyers want to understand the company’s origin story such as when it was founded, by whom, and how current ownership came to be involved. This provides context for the business’s values and evolution.

• What’s the ownership and decision-making structure?
  Is the company closely held? Are decisions centralized or shared across a leadership team? Clarity here helps buyers understand how nimble the business is and who needs to be involved in key decisions.

• What are the owners’ post-sale plans?
  Will current owners stay on in any capacity, help with the transition, or step away entirely? This influences the integration and succession strategy.

• Who manages the day-to-day?
  Buyers look for operational stability. Whether it’s the owner, a seasoned manager, or a full leadership team, they want to know who’s truly running the business.

• Why are you selling?
  This question isn’t just about motivation, it’s about identifying potential red flags or reassuring the buyer that the sale is a strategic, rather than reactive, decision.

• What do the financials look like?
  Buyers expect a top-line view of revenue and EBITDA trends. Are things growing, flat, or declining? Strong financial performance sets the tone for valuation.

• Who are your customers?
  Understanding the customer base: whether contracts are long-term, recurring, or project-based, and if any single client represents a large share of revenue, is key to assessing risk.

• What’s the revenue mix?
  Breaking down revenue by product or service line helps buyers evaluate concentration risk and areas of potential growth.

• What’s the competitive landscape?
  Who are your primary competitors? What differentiates you? Buyers want to know what threats or opportunities exist in the market.

• What does the team look like?
  A clear org chart, including any family members or long-tenured employees, helps buyers evaluate the team’s strength and succession needs.

• How do you attract and retain talent?
  Labor stability matters. Expect questions about recruitment, retention, and any staffing challenges you’ve faced.

• What’s the state of your facilities and equipment?
  Are your locations owned or leased? Are there upcoming capital expenditure needs that could affect operations or growth?