Why Asking the Right Questions Matters
Buying a business is a major investment that comes with substantial risk. Before you do, you’ll want to identify potential red flags, validate the business’s value, and ensure that it aligns with your goals. Asking the right questions during the acquisition process can help you understand the full picture: operations, customer relationships, competitive positioning, and long-term viability.
Don’t focus on surface-level metrics; deeper due diligence reveals what’s really driving the business. These eight questions will help you move beyond the basics and into the kind of insight that leads to smarter decisions. If you’re exploring this process, learn more about our acquisition services to see how we can guide you through it.
8 Key Questions to Ask Before You Buy
1. “Why are you selling?”
The seller’s motivation can reveal a lot. Retirement or relocation may suggest stability, while declining performance or internal conflict could be a red flag. Ask follow-up questions to understand the full context.
2. “What percent of sales are your top 5 customers?”
A business heavily reliant on a few clients may be vulnerable. If one customer leaves, revenue, profitability, and cash flow could drop significantly. Look for diversification and long-term customer contracts and/or relationships to mitigate risk.
3. “Who are your competitors?”
Understanding the competitive landscape helps you assess market saturation, pricing pressure, and differentiation. Inquire about how the business compares in terms of service, pricing, and reputation. Ask, “Why do your customers choose you over your competitors?”
4. “What share of the market do you think you have?”
This gives you a sense of scale and opportunity. A dominant market share may indicate stability, while a small share could mean room for growth or difficulty gaining traction.
5. “What role does the owner play in daily operations?”
If the owner is deeply involved, their departure could disrupt operations. Ask about transition plans and whether key staff can maintain continuity. Make sure you understand the technical skills needed to manage the business now and into the future—do you have the technical know-how to continue to develop new products?
6. “Are your financial statements internally or CPA prepared?”
CPA-prepared statements offer more reliability. Internally prepared documents may require deeper scrutiny. Either way, involve your own CPA or M&A advisor to make sure you understand the numbers and identify anything unusual to ask about.
7. “Are any family members involved in the business?”
Family-run businesses can have strong culture, but also hidden dynamics. Consider how their exit or continued involvement might affect operations, morale, or decision-making.
8. “What is the trend in sales over the past few years?”
Look for consistent growth, seasonal fluctuations, or signs of decline. Trends tell a story that one year’s financials can’t. Ask for at least three years of data to spot patterns.
How to Use These Questions in Due Diligence
These questions are the foundation of your due diligence process. Start by organizing them into categories: financial, operational, legal, and strategic. Use them during initial seller interviews, and revisit them as you review documents and meet with advisors.
Keep a due diligence checklist and track responses, red flags, and follow-ups. If something feels vague or inconsistent, dig deeper. The goal is to move from surface-level understanding to a clear picture of the business’s strengths, weaknesses, and future potential.
If you’re still in the early stages and wondering how to find an M&A advisor or broker to assist with your acquisition, check out our guide on how to find an M&A advisor or business broker in San Diego. It offers practical tips on evaluating fit, licensing, and approach, valuable insight whether you’re buying or selling.
Buy With Confidence
Buying a business is a major step that requires insight, preparation, and the ability to ask the right questions at the right time. Whether you’re acquiring your first company or expanding through strategic purchases, thoughtful due diligence is your best protection against costly surprises.
The questions outlined above are designed to help you uncover the full story behind any business opportunity. They’ll guide your conversations, shape your analysis, and ultimately help you make smarter, more confident decisions.
Final Thoughts
Over the years, we’ve learned that if it’s the right acquisition, you probably can’t pay too much for it, and if it’s the wrong acquisition, you can’t fix it by buying it cheap. Be diligent and smart about making an acquisition, and if something doesn’t feel right, dig until it does or you decide to walk away. Sometimes the best acquisition is the one you don’t make.
If you’re considering buying a business and want expert guidance through the process, our team is here to help. As a San Diego-based, lower middle market M&A advisory firm, Shoreline Partners specializes in helping buyers navigate complex acquisitions with clarity and confidence. Contact us today for a confidential consultation, and let’s explore your next opportunity together.