Qualifying the Candidate Checklist


During the negotiation process, gather information to qualify the candidate. Before you can discuss a deal in any detail, you will need to answer most of these questions.


Is management retention important?


If yes, then you are investing in the management team not the business and you must get comfortable wit the management before expending the time and effort on other analysis.


Important considerations are:

  • Management’s basic approach – entrepreneurial, authoritative, and does their approach conflict with yours?
  • What are the chemistry concerns?
  • Are key managers willing to stay?
  • Management’s ability to operate autonomously.
  • Identification of management weakness and how they will be addressed.
  • Management’s knowledge of the company’s operations.
  • Where are the decisions made and by whom?
  • Is management able to articulate a clear, rational business plan?
  • How well does management know the market?


Do not continue if management is important and you have concerns about the management team. Address and eliminate those concerns before proceeding further!


Does the target meet our acquisition criteria?


Who is the decision maker(s) for the sale of the business?


Whoa re the shareholders?


Why is it for sale?


What is the seller’s timetable?


What is the seller’s no sell alternative?


Is the seller’s price expectation realistic?


What is the history of the company?


What is the company’s reputation in the marketplace?


Viability of target business:

  • Were the last 3 years typical?
  • What is the expected price/profit erosion?
  • What % of sales are the 3-5 largest customers?
  • What is the geographic distribution of sales?
  • What is the percentage of repeat sales?
  • What type of sales force is used?
  • What are the channels to the market?
  • What is their rep structure and commission?
  • How well do the products stack up to competition?
  • How do their retail prices compare to their competition?
  • What is their market share?
  • Are sales growing year to year?
  • Is the business profitable?
  • Is the business cyclical?
  • Are there year 2K or other information system problems?


How will employees react if we close the deal? How is morale?


How will customers react if we close the deal?


How will key vendors react if we close the deal?

What does the seller expect from the buyer and is it realistic?


Does the deal meet our risk criteria?


Will 1+1=3 or more?


What is our analysis of the future of this business and is it in line with the analysis of the seller’s management team?


Can we finance the deal?


Be a realist-look for tips of icebergs!


Are there any deal killers?


Did we review all former checklists?


Did we learn something new or conflicting?


Is there anything here that makes me want to walk away?



Qualifying the Candidate