1. What supports the earnings?
Understand how revenue is generated, why customers stay and which costs are required to maintain the business. Identify dependencies on key customers, people or contracts, and distinguish established performance from assumptions about future growth.
2. What needs to happen for the transaction to work?
Consider the proposed purchase terms, funding requirements and conditions to completion. Ask what must be confirmed through diligence and which assumptions could materially change the acquisition case.
3. Who will run the business?
AWP takes an active management role in the businesses we acquire, working with their leadership teams. Review how we plan to handle the transition, assign operating responsibilities and provide the people or systems the business needs.
4. How will performance be reviewed?
Clarify which information would be available, who would prepare it and how decisions would be made when performance differs from the plan. Reporting should help the parties understand the business and address issues.
5. What are the terms and risks of the capital arrangement?
Understand the proposed instrument, fees, rights, obligations and any liquidity or exit provisions. Those details belong to the specific proposal. They cannot be inferred from the attractiveness of the business alone.
Start with the requirements that matter to you
A useful introduction describes your interests, time horizon and requirements for considering a partnership. That helps establish whether there is a basis for a more detailed discussion.
Private business investments can be illiquid and involve loss of capital. This guide is an introduction to assessment questions, not an investment recommendation or offer.