M&A Deal Points | Diving Deeper into Key Questions Sellers Should Expect

In our previous post, we discussed some of the basic, factual questions that a seller should be ready to answer during an M&A management meeting—topics often covered by the Confidential Information Memorandum (CIM). While these questions are foundational, they are just the starting point of the conversation.

Buyers are encouraged to ask these questions naturally, allowing the seller to lead the discussion where appropriate. Similarly, sellers should be prepared for both these questions and the follow-ups that are likely to arise.

Diving Into More Detailed Questions

Now, let’s explore some more in-depth questions that buyers should ask, and sellers should be ready to address. Special thanks to Nancy Fox, Seshan D. Nissanka, Jeff Van Deusen, Brian Agnew, and Said Mansour for their valuable contributions to this section.

Here’s what to expect:

1. Service/Product Mix
   What types of services or products do you offer, and how does your sales mix break down?

2. Customer Profile
   Who are your customers (B2B, B2C, etc.), and what percentage of sales do they represent?

3. Customer Stickiness
   What is the length and structure of your customer contracts, and how long have your key customers stayed with you?

4. Customer Concentration
   Do any customers account for more than 10% of your total sales?

5. Key Competitors
   Who are your main competitors, and how do you differentiate from them?

6. Growth Opportunities
   What opportunities for growth do you see for the business?

7. Perceived Threats
   Are there any risks or threats to the business you foresee in the near future?

8. Organizational Structure
   How is your company structured in terms of employees, and do you have family members involved? What does your org chart look like?

9. Workforce Details
   Is your workforce union or non-union? What are your strategies for recruiting, retaining, and onboarding talent?

10. Capital Expenditures (CapEx)
    What are your typical capital expenditures, and what maintenance CapEx is required?

11. Hard Assets
    What major hard assets do you have, and what condition are they in? Are there any upcoming replacement timelines?

12. Valuation Methodology
    What is your understanding of how the business might be valued? Are you familiar with earnings multiples, such as adjusted EBITDA multiplied by a typical range?

13. Preferred Transaction Type
    What type of transaction do you prefer? Would you consider a stock deal or have an interest in earnouts, rollovers, or other terms like a 338(h)(10) election?

14. Post-Closing Plans
    What are your plans after the sale? Will you assist with a short or mid-term transition, or stay on as an employee indefinitely?

15. Other Key Information
    Is there any other information we should know? This could include upcoming key milestones, anniversaries, or personal interests outside of work.

What’s Next?

For sellers, the goal of these discussions is to present the business candidly, while highlighting its strengths. For buyers, the information gathered from this conversation will help scope targeted due diligence and bring the process closer to an LOI.