What questions should you ask when buying a business?

What should you ask before you make an offer?

Before the LOI you have no exclusivity and little access. The goal is to find the deal-killers cheaply. Every question here can be asked on a call or in writing, and the answers should come before you spend money on lawyers or accountants.

1. Why are you selling, and why now? Retirement is the most common reason. The IBBA reports it as the top reason in its Q2 2026 survey, cited by 45% of sellers in deals under $500,000 and up to 72% in $1 million to $2 million deals. A stated reason that does not fit the owner's age or the business's trend is a reason to dig.
2. How did you get to the earnings figure in the listing? Ask for the add-backs line by line. Seller's discretionary earnings (SDE) adds back one owner's salary and benefits. Anything beyond that needs a reason.
3. What do you do in a normal week? Ask for hours by task. Quoting, selling, hiring and holding the license are the tasks that are hard to replace.
4. What share of revenue comes from your top five customers? Ask whether any customer has a contract, and whether it can be assigned.
5. What does the lease say? Remaining term, renewal options, assignment clause and rent increases.
6. Who are the key employees, and do they know about the sale?
7. Are any licenses or permits in your personal name?
8. What has revenue done over the last three years, and why?
9. Will you carry a seller note, and on what terms? BizBuySell's buyer survey found 61% of buyers want seller financing, so the seller has likely heard this question before.
10. How long will you stay after closing? Under current SBA rules a seller can stay as a consultant or employee for up to 24 months in total.

Write the answers down. You will compare them with the documents later. A seller whose numbers change between the call and the tax return has told you something.

What should you ask after the LOI is signed?

After the LOI the questions change from "what" to "show me." Group them by what they prove.

• Earnings are real. Can I see three years of business tax returns, monthly bank statements and the general ledger? Why does revenue on the tax return differ from the P&L? What is behind each add-back?
• Earnings will continue. Which customers left in the last two years, and why? Are any large contracts up for renewal? Is any revenue one-time?
• The assets are what you think. What equipment needs replacing in the next two years? Is inventory counted and how is it valued? What do receivables look like by age?
• There are no hidden liabilities. Any lawsuits, tax notices, warranty claims, or wage disputes? Are sales and payroll taxes current?
• The deal can be financed. These are the lender's questions. Does cash flow cover debt at 1.25x on historical numbers? Will the independent valuation support the price? Is the purchase price $3 million or more, which triggers a required quality of earnings report?

What should you ask before closing?

• Has the landlord consented to the assignment or a new lease?
• Have customers with assignable contracts consented, where consent is required?
• Which employees will you introduce me to, and when?
• What is the transition plan for each of your weekly tasks, and who takes each one?
• Which vendor accounts, software logins and bank relationships need to move?
• Are there any changes in the business since the LOI that I should know about?

Which questions do first-time buyers forget to ask?

Most buyers forget to question themselves and their lender. Ask your lender, before the LOI, how it treats seller notes, what salary it assumes for you, and whether it will lend on this industry. Ask yourself whether you have the 10% equity injection, seasoned in your account for about 30 days or documented as to source. Confirm you meet the SBA citizenship rule: since March 1, 2026, SBA loans are only for businesses owned by U.S. citizens or U.S. nationals with a U.S. principal residence.

Ask one more question if you plan to buy more than one business: could this company become the base for a second acquisition? That changes which answers matter. Clean books and a manager who can run the business matter more to a repeat buyer than a slightly lower price.

Worked example: how the questions change the math

A listing asks $1.2 million on stated SDE of $400,000. That is 3.0x, above the 2.57x all-sector BizBuySell average and the 2.7x Q1 2026 average. The question "how did you get to $400,000?" reveals $50,000 of "one-time" repairs that happen every year.

1. Supportable SDE: $400,000 minus $50,000 = $350,000.
2. Salary for you or a manager (assumed): $120,000. Cash available for debt: $350,000 minus $120,000 = $230,000.
3. Project costs: $1.2 million price plus an assumed $80,000 of working capital and fees = $1.28 million. Equity injection at 10%: $128,000. SBA loan: $1.152 million.
4. Annual payment at 10% (prime 7% plus 3%, the September 2026 maximum for loans over $350,000) over 10 years: about $182,700.
5. Coverage: $230,000 divided by $182,700 = 1.26x. The lender's floor for an initial acquisition is 1.25x.

One question moved the deal from comfortable to barely financeable. Rates move, so check current prime before you run this yourself.

Where these numbers come from: Seller motives and deal data from the IBBA Market Pulse Q2 2026. Buyer financing preferences from the BizBuySell buyer survey. Multiples and the SDE definition from BizBuySell data compiled by Beancount. SBA rules (1.25x coverage, 10% injection, $3 million QoE threshold, 24-month seller transition) from this summary of SBA SOP 50 10 8.1 and Cantrell Firm, which also covers the citizenship rule. Diligence timing from BizBuySell's SBA loan timeline. Rate cap from NerdWallet. SOP 50 10 8.1 applies to loans that receive an SBA loan number on or after October 1, 2026 (SBA Information Notice 5000-880695).

Related questions

Should I ask for tax returns before the LOI?

You can ask, and some sellers will share them. Many brokers release full tax returns and bank statements only after an LOI. If you get only a summary P&L, make your offer price conditional on the tax returns supporting the stated earnings.

How many questions is too many before an offer?

Keep the pre-LOI list to about ten. Sellers and brokers judge buyers on focus. A 100-item list before an offer signals that you will be slow and hard to close with.

Who should ask the questions, me or my advisers?

Ask the business questions yourself, because you are learning how you will run it. Let your CPA ask the accounting questions and your lawyer the legal ones after the LOI. The lender will ask its own questions regardless.

What if the seller gets defensive?

Some defensiveness is normal for an owner selling a life's work. Explain that the lender needs the same answers. Refusal to provide documents after an LOI is different, and it is a reason to walk.

What comes next

The answers only matter once you check them against documents. The next question is how do you verify that a seller's numbers are real? The buyers who end up with the most valuable companies decide what the business goes into before they buy it, so add one question to your list: what will this company be part of in five years?

Related articles

• What is on a due diligence checklist for buying a small business?
• How do you know whether a business can run without its owner?
• How much customer concentration is too much?
• Which add-backs are legitimate, and which should you question?
• What are the SBA 7(a) rules for buying a business, as of October 2026?

Meraki Dealmakers is a service of Meraki Partners, LLC, an advisory firm. It is not a broker-dealer, investment adviser, business broker, law firm or accounting firm. This article is general information, not legal, tax or investment advice.