Initial Deal Screening Checklist: Assess Any Business for Sale in 30 Minutes
Before you spend three weeks on due diligence, a day on accountant fees, and two rounds of lawyer review, there's a prior question worth answering: does this deal deserve any of that time at all?
Most buyers learn this lesson the hard way. They get excited by a broker's pitch, commit to a confidentiality agreement, receive the information memorandum, start running numbers — and only then discover that the owner hasn't taken a wage in three years (and the "profit" disappears the moment you normalise for it), or the two biggest clients account for 70% of revenue and are month-to-month, or the commercial lease expired nine months ago and the landlord is non-committal about renewal.
A broker told me about a buyer last year who'd spent $8,000 in professional fees on a deal that failed the most basic 30-minute screen. Not a financial catastrophe, but an avoidable one.
This checklist is what to check before any of that happens. It's structured in three phases matching three stages of deal assessment — you can stop after Phase 1 if the basics don't stack up, or work through all three before committing to a full due diligence process.
What this checklist covers
Phase 1 — The 5-minute filter: Basic deal criteria that should match your acquisition profile before you invest any further time. Price range, industry, geography, revenue scale. If it doesn't pass Phase 1, put it back.
Phase 2 — The 20-minute seller conversation: Questions to ask the broker or seller in the first call. Reason for sale, owner dependency, staff tenure, customer concentration. Most deal-killers surface here if you ask directly.
Phase 3 — The preliminary numbers check: A basic financial sanity test on the information memorandum before you engage advisors. Normalised earnings, trend direction, asking price vs multiple, working capital.
Used correctly, this checklist gets you from "interesting listing" to "worth pursuing" or "pass" in under 30 minutes — before you've spent a dollar on professional advice.
For owner dependency specifically, Phase 2 has a dedicated block of questions — because a business that fails the owner-dependency test rarely recovers regardless of how good everything else looks.
For the deeper financial checks once you've decided to proceed, the financial red flags to watch for article covers what to look for in the accounts before you commission a full financial review.
This resource is part of Module 3 (Deal Sourcing) of the Playbook. It sits at the top of the deal funnel — before the Preliminary Business Evaluation Scorecard (which goes deeper on business quality) and well before the comprehensive due diligence checklist.
Get the free screening checklist
Enter your email to unlock the full resource. You'll also get weekly insights on buying businesses in Australia.
No spam. Unsubscribe anytime.