Most people never ask this question before they buy a business.

Rick Kurtz

11d • General discussion

They look at revenue. They look at profit. They look at the asking price.

Then they try to figure out if the deal is "worth it."

That is the wrong question.

The right question is: what does this business look like if the owner disappears tomorrow?

Because that is exactly what is about to happen.

You are replacing them. Every relationship they built. Every process they run from memory. Every customer who only buys because of them.

If the answer is "the business falls apart," you do not have a business. You have a job listing disguised as an acquisition.

I almost bought one of these. The financials were clean. The margins were strong. But every major client had the owner's personal cell phone number. He was the business. The P&L just hadn't figured that out yet.

Here is how you pressure test this before you ever make an offer:

Ask the owner how many days they took off last year. If the answer is zero, that tells you everything.
Ask what would happen if they got sick for 30 days. Listen to what they say. Listen harder to what they do not say.
Look at the org chart. If the owner is in more than two boxes, the transition risk just doubled.

The best businesses to buy are the ones where the owner is bored. Where the team runs the day to day and the owner is looking for their next thing.

That is the business you want. Not the one with the best top line number.

What is the first thing you look at when evaluating a deal?

Drop it below.

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