Understanding the business itself.
WHAT TO ESTABLISH ABOUT CUSTOMERS
Who they are How much each contributes How long they have been customers Whether contracts exist Whether they are tied to the owner personally
WHY CONCENTRATION MATTERS
A business where a few customers dominate can lose most of its value in a single decision.
WHAT TO CALCULATE
The proportion from the largest customers.
WHAT TO ESTABLISH
What would happen if the largest left.
WHAT TO EXAMINE ABOUT REVENUE
Whether it is recurring or repeatedly won Trends by customer New customers gained and lost
WHY CUSTOMERS LOST MATTERS
Stable total revenue can conceal heavy churn replaced by new business.
WHAT TO ESTABLISH ABOUT SUPPLIERS
Who is critical Whether terms are personal to the owner Whether alternatives exist Whether any are also creditors
WHAT TO ESTABLISH ABOUT COMPETITION
Who competes What has changed recently Whether anything is arriving
WHAT TO ESTABLISH ABOUT THE MARKET
Whether it is growing, stable or declining What could disrupt it
WHAT TO ESTABLISH ABOUT OPERATIONS
Whether processes are documented Whether the business depends on undocumented knowledge What systems are used and whether they transfer
WHAT TO ESTABLISH ABOUT PREMISES
Lease terms and remaining period Whether it transfers Rent and review provisions Condition and repair obligations
WHY LEASE TRANSFER MATTERS
A business that cannot keep its premises may be worth little.
WHAT TO VERIFY
That the landlord will consent.
