Essential Questions for Buyers and Sellers in Initial M&A Discussions

What questions should you or your advisor anticipate from buyers during an initial call or meeting? And, if you're a buyer, what questions should you ask?

Here's a sampling:

▪ When was the business founded? By whom?

▪ What's the tax treatment? S-Corp, C-Corp, etc.?

▪ Who are the current owners? What are their roles in the business?

▪ What are the owners' plans post-closing (remain as employees, assist with a transition and move on, etc.)?

▪ Who runs the day-to-day if someone other than the owners?

▪ Why are the owners considering a sale?

▪ What is the approximate size of the company, either on a revenue, EBITDA, or net income basis?

▪ Has the company been growing, contracting, or flat over the past few years?

▪ What products / services are offered? What is the approximate revenue mix for the product / services?

▪ Who is the typical customer?

▪ What's the general nature of customer relationships - long-term contracts, one and done, something in between?

▪ Do any of your customers make up 10%+ in sales?

▪ Tell us about your key competitors?

▪ Can you describe your org chart in general terms: number of employees, management roles, mid-level roles, and other roles? Are any family members employed by the business?

▪ How do you recruit and retain employees? Have there been any staffing challenges?

▪ Is the workforce unionized?

▪ Where are your key business locations (warehouses, servicing, retail, and other facilities)?

▪ Are your facilities owned or leased? Are any leases up for renewal in the next 12 months?

▪ Tell us about CapEx and maintenance CapEx required for the business, including key equipment, vehicles, any bar-code tracking, etc.

▪ Anything else we should know?

As you can see, it's an extensive list. While some buyers will approach their questions like an interview, the best will often weave them into a natural conversation both to develop rapport and to get more candid, expansive responses.