How to read a business-for-sale listing in 20 minutes
Six things to check, in order, before you sign the NDA or ask the owner a single question.
In 30 seconds
- Check that the sales are verified, and for how many months
- Compare the price with what the owner takes home, not with sales
- Write your questions down before you open the data room
What you’ll need
- One listing you like
- 20 minutes
- Somewhere to write your questions
Step 1Check where the numbers come from
Every listing on HumDays says which systems the sales come from, such as Stripe, Square or the bank, and for how many months. Twelve months or more is best. Fewer months means you see less of the year.
Step 2Look at the shape of the year
Find the best and the worst months. A big gap is normal in some trades, like lawn care or pressure washing, and a warning sign in others, like a laundromat.
Step 3Compare the price with what the owner takes home
Sales are not profit. The listing shows what the owner takes home each year, and how the asking price compares with what similar businesses sold for.
If the price looks high, the reason should be in the listing: a long lease, new equipment or contracts that carry on after the sale.
Step 4Read why they are selling
Retiring, moving or starting something new are the common reasons. If the reason is vague, make it your first question.
Step 5Check what is included
A listing should say what you get on the day the sale completes. Anything that is not written down is not included.
- Equipment, vans and stock
- Contracts and regular customers
- The name, phone number and website
- How long the owner will help after the sale
Step 6Write your questions, then sign the NDA
One NDA opens every data room on HumDays. Before you sign it, write down the three things you most need to know. It keeps the first conversation short and useful.