In The Trenches
Questions You Should Be Prepared to Answer Before Buying (or Selling) a Small Business
Dec 21, 2023
Get insights on frequently asked questions in small business transactions, the importance of proper accounting services, key questions for buying or selling a small business, and understanding greenfield vs. brownfield customer acquisitions for assessing business potential.
29:05
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Quick takeaways
- Buyers should analyze the source of the opportunity, sources and uses, earnout payments, debt package, and external due diligence reports.
- Acquisition entrepreneurs must understand GP and LP economics, equity waterfall, searcher's own investment, and seller-related factors like seller profiles and transition plans.
Deep dives
Transaction Basics
Transaction basics are the foundational elements of any transaction. Buyers need to understand the source of the opportunity, whether it's proprietary or competitive. They should also analyze sources and uses, including dollar amount, EBITDA multiple, and percentage of total sources and uses. Additionally, buyers must determine how earnout payments will be funded, explore details of the proposed debt package, and assess reports from external due diligence providers.
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