| • |
Most importantly, why is the seller selling? The answer will either raise red flags or be
consistent with, and met with, no resistance when asking the information in the questions
below. |
| • |
Have you asked to review the certified financial statements of income, cash flow and
balance sheets for the last three years? If you borrow from a bank to purchase the venture,
the bank will want to see them. |
| • |
Have you asked to see the company’s (not the owner’s personal) IRS returns for the last
three years? The bank will. |
| • |
Have you asked for a copy of all documents of all outstanding indebtedness like notes
payable, accounts payable, real estate and equipment leases? The bank will. |
| • |
Has the seller offered to stay around for awhile after the sale to help with transition, and
have you discussed some compensation for his services during that transition period? |
| • |
Have you been allowed to talk with the employees, or is this sale of a confidential nature at
this time? If so, why are the employees not being told of the impending sale? |
| • |
Has there been any significant turnover of employees? If so, why is that? |
| • |
Have you learned anything about the quality of customer relations at the company? Is there
a close relationship between company and customers? |
| • |
Have you learned anything about the relationship between the company and its vendors?
Do vendors display preferred, regular or irregular relations with the company? |
| • |
Is there a management team for this company? If so, are they aware of the impending sale,
and how do they feel about it? |
| • |
What are the actual conditions of the working environment? Are there any hazardous
situations or is this a well-kept workplace? |
| • |
What are the actual conditions of existing fixed assets like office equipment, machinery,
vehicles and the like? Do employees, managers and supervisors demonstrate good
maintenance and cleanliness of company property? |