Business Organization

• How is the business legally organized (corporation, sole proprietorship, partnership, etc.)?
  •    If the business is a partnership, how many partners are there, and who are they?

• If the business is a corporation:
  •    How many shareholders are there?
  •    Who are the major shareholders, and what percentage of the total outstanding stock does each own?
  •    Is the stock publicly traded?  If so:

• On which market?

• What is the recent market price for shares?

Business History

• How long has the business existed, and for how long under its present owners?
• Is the company engaged in any joint ventures or similar undertakings?
• What are the company's major accomplishments?  What are its failures?
• How is the business regarded by its customers, competitors, suppliers, employees, its bank, the financial community, the community in which it is located, and government agencies with which it interacts?
• What government agencies have regulatory or other control over the business?  Is the business currently in compliance with all requirements?
• Does the company's success depend heavily on one or more key employees?
• Are there any potentially threatening situations in connection with management, products, services, finances, legal obligations, etc.?
• What is the company's litigation history?
• What is the business's or its principals' history with regard to anti-discrimination regulations, anti-trust laws, securities laws, etc.?

Products and Services

• What are the company's main products and/or services?
• How long has the company been selling each product/service?
• What has the sales volume been for each product/service within the last five years?
• What are the costs and gross profit of each product/service?
  •    What portion of the cost is attributable to labor?
  •    What portion of the cost is attributable to overhead?
  •    What portion of the cost is attributable to materials?
• What is the forecast for future sales of these products/services?
• What other products or services could be offered with the current facilities and staff?
• Which products/services are proprietary?
• What distinguishes your company's products/services from those of competitors?
• How does the company's price and quality differ from its competitors' similar products/services?
• What warranties does your company provide?
• Which products does the company purchase from others for resale?
• What sorts of agreements does the company have with these suppliers?
• How much does the business rely on outside vendors?

Marketing

• What are the main uses and markets for each major product/service?
• How far are these markets established?
• What are the prospects for growth in these markets?
• Who are your current principal customers?
• What percentage of sales for given major products do these principal customers represent?
• What major potential customers have not yet been secured as customers?
• How do sales break down geographically?
• Who are your main competitors?
  •    What are their major strengths and weaknesses?
  •    What is their estimated sales volume?
  •    What is your company's position among its competitors with regard to sales volume?
  •    What is your company's position among its competitors with regard to reputation?
• Does your company have a backlog for any of its major products/services?  What has been the history of backlogs for the last three years?
• Has your company's sales growth been ahead, with, or behind the industry trend?
• What is the forecast for industry-wide sales for each of your company's major products/services?
• What is your company's forecast for sales of the major products/services?
• Does your business regularly use any advertising or public relations firms?  Which?
• Are your marketing efforts aggressive and skillfully performed?
• Who is responsible for market research?
  •    Does your company use outside consultants for market research or similar work?
  •    If so, who?  What has their record been?
• Who is responsible for advertising and sales promotion?
• Who is responsible for exploiting new markets?
• How is your direct selling group structured (if any)?
• How is your distribution and/or sales representative group organized?
• Who is responsible for providing various services (installation, service, etc.)?

Finances

• What are the business's sales and earnings for the past five years?
• What salaries/dividends have been paid to owners/stockholders for the past five years?
• What is the state of inventory?
  •    What is the normal inventory level, and where is it presently?
  •    What is the condition of the existing inventory?
  •    Is any inventory on consignment?  If so, how much, to whom, and on what terms?
• What are the details of the accounts receivable and accounts payable?
• What loans are outstanding, to whom are they payable, and on what terms?
• What is included in accrued expenses payable, and what is the current amount?
• Are all taxes current?
• What overhead rates are used in determining costs?
• What are the company's departmental budgets?
• What is the advertising and promotion budget?
• What is the total payroll?
• Does the company own equity in any other businesses?
• What liabilities exist in connection with warranties?
• Are there any existing claims or known liabilities?
• Are there any contract disputes or negotiations?
• Are there any outstanding stock options or the like?

Facilities

• Is real estate owned or leased?
• If owned:
  •    What is the appraised value?
  •    When and by whom was the appraisal made?
• If leased, what are the terms of the lease?
• What are the zoning restrictions on the current real estate?
• Is any equipment leased?  Which?
• Is there excess or idle capacity?  How much?

Personnel and Organization

• What are the roles of key executives and personnel?
• How many employees does the company have?
• Has the company established standard pay rates for its various positions?
  •    How do these compare with pay rates of other similar employers in the area?
  •    What is the salary review policy?
  •    What are the employee benefits?
  •    Does the company pay all benefits, or do employees pay part?  If so, how much is the employer contribution?
• Are any employees relatives of the executives or owners?  If so, what are their duties and how much are they paid?
• Are there any employees on the payroll for special reasons (friend of the owner, long-term service, etc.) who do not pull their weight?
• Are workers unionized?  If so:
  •    Which workers?
  •    What are the details of the labor contracts?
  •    Have their ever been any strikes?
• What has been the turnover rate?
• Does the company provide formal job training?
• Are there written personnel policies?
• Is labor generally available in the area?
• Are any employees or management under contract?  If so, what are the terms?

Management

• What are the key management members' backgrounds?
• What are the key management members' salaries?
• Does management receive any "perks?"  If so, what, and how much are they worth?
• What are the management capabilities of persons in charge of key departments?
• Are there strong differences of opinions between management members?  What are they?
• Do various departments work well together, or is there friction?
• Is management willing to take appropriate risks?
• Who is dominant in the organization?
• If the business is a corporation:
  •    What control do major stockholders exercise over the business's policies and activities?
  •    Have there been proxy fights or attempts to take over the company?

If the Business Is For Sale

• What assets and liabilities are expected to be included or excluded from the sale?
• If the business is a corporation, will the sale include the capital stock or just the assets?
• What are the preferred payment terms?
• Do you expect a broker to be involved?  If so, what is the fee and who will pay it?
• Are key management staff aware of the sale?
• Will a sale require substantial management reorganization?
• Which management members would remain following the sale?
• Will management cooperate in the sale and post-sale activities?
• Will the sale significantly impact union labor?
• What licenses, contracts, etc. must be transferred to the buyer?
• What contracts will have to be changed or terminated because of the sale?
• What are the potential problems connected with the sale?
• What would insure continued business success after the sale?
• What amount of money would the buyer need to invest in the business, and why?
• Are any partners or major shareholders opposed to a sale, and who big a hurdle will this create?