Questions to ask a seller before making an offer

The documents tell you what happened. The seller tells you why, and whether you can believe the documents. You can read the basic facts in a P&L, so use these conversations to test whether the story, the numbers, and the person all line up. Below are the questions to ask a seller before making an offer, why each one matters, and what a bad answer sounds like.

Why are you really selling?

Ask it early, then ask it again later in a different form ("what will you do next?"). Retirement, health, relocation, and plain burnout are all honest, common answers. What you're listening for is consistency, and whether the timing matches the numbers. A seller "retiring" the year after revenue peaked tells one story, and a seller "retiring" right as the biggest customer wobbles tells another. A bad answer changes between conversations, or it's a too-smooth speech that never quite explains why now.

The money questions

• "Walk me through how a dollar comes in and where it goes." One answer shows you the sales cycle, the margins, and how hands-on the seller is with the books.
• "Can you document each add-back on this schedule?" The add-back schedule is where price inflation hides, and a prepared seller has the records ready. (Here's how to evaluate what they hand you.)
• "Do the tax returns match these P&Ls? If not, why?" A gap can be fine if the seller explains it, but an unexplained gap is fatal. A bad answer sounds like "there's a lot of cash the books don't show, you know how it is." Cash nobody can prove is worth zero in your price.
• "What did you spend on equipment and repairs the last three years, and what's due next?" Deferred maintenance is a cost that doesn't show in the asking price, and you'll pay it soon after you buy.

Whatever number comes out of this conversation, confirm which earnings metric it is (see SDE vs EBITDA) before you compare it to any multiple a broker quotes you.

The customer questions

• "Who are your top five customers, and what share of revenue is each?" Concentration is the fastest way a good-looking deal becomes risky. More than 20% to 30% of revenue in one account should change your price and structure.
• "Which customers are personal relationships of yours?" Revenue attached to the seller's friendships may not survive the handover, so ask how each relationship transfers.
• "How do new customers find you?" If the answer is "word of mouth" for the third decade running, marketing is either an untouched opportunity or a skill leaving with the seller. Decide which before you price it.

The team questions

• "Who does what, and what do only you do?" The honest version of this answer is the best measure of owner dependence, which is the problem that quietly sinks Main Street deals.
• "Who's critical, what do they earn, and do they know you're selling?" You're planning retention before you own the problem.
• "Are any licenses or certifications held personally by you or an employee?" Some businesses legally can't operate the day the license holder leaves, so confirm what transfers with your attorney.

The closing question

End with this one: "If you were me, what would you worry about in this deal?" Honest sellers usually pause, then tell you something real, because they know the business's weak spots better than any diligence process will. A seller who answers "honestly, nothing" about a business they've run for twenty years has given you the most useful red flag of the whole conversation. (Here's the full list of red flags these questions are designed to surface.)

How to run the conversation

Don't fire all of these in one sitting. It turns into an interrogation, and it gets you rehearsed answers and a defensive seller. Spread them across the process: a few in the first call, the money questions once you've seen financials, the staffing detail in diligence. Write down every answer, because the comparison between what the seller said in week one and week six is itself diligence. Keep the tone friendly and don't try to catch anyone out, since you're two people figuring out whether a deal makes sense. Sellers tend to relax around buyers who ask sharp questions kindly. The whole framework is in our guide to analyzing a business before you buy it.

FAQ

What's the most important question to ask?

Ask "Why are you selling?" more than once, in more than one way. You're listening for whether the answer stays consistent.

When should I ask these?

Spread them across the whole process instead of asking everything in one meeting. Match the question to the stage: story questions early, money questions after the financials, people questions in diligence.

What if the seller won't answer something?

One deflection is normal, because some answers legitimately wait for diligence or an NDA. A pattern of deflection on the same topic tells you something, so investigate hardest wherever the seller steers you away.

Educational content, not financial, legal, or tax advice for your situation. Confirm specifics with your own CPA and attorney.