Evaluate a small business I'm thinking of buying
A structured first-pass assessment of a business for sale: earnings quality, risks, valuation sense-check, and the questions to ask the owner.
The prompt
Help me evaluate a small business I am thinking of buying.
Business: [WHAT IT DOES, location, years operating, number of employees]
Asking price and deal terms: [price, what is included, seller financing, earn-out]
Financials I have: [3 years of P&L, balance sheet, tax returns, seller's discretionary earnings (SDE) or EBITDA, add-backs claimed; paste figures or summaries]
Why the owner is selling: [STATED REASON]
My background and plans: [my experience, whether I will run it, how I will finance it]
Analyze:
1. Financial trends: revenue, gross margin, operating costs, and earnings over time, and anything unusual.
2. Quality of earnings: test each add-back; flag owner perks, one-off items, and anything that looks inflated. Reconcile reported earnings with tax returns where possible.
3. Key risks: customer or supplier concentration, owner dependence, key staff, lease terms, licenses, deferred maintenance, industry trends, and legal or regulatory exposure.
4. SWOT focused on what changes after the sale.
5. Valuation sense-check: how the asking price compares to earnings using a multiple range I should verify with a broker or valuation professional, plus whether the business can cover the debt payments with room to spare.
6. Questions for the owner: 20-30 specific questions grouped by financials, customers, operations, staff, and legal.
7. Due diligence checklist and the documents to request before signing a letter of intent.
Work only from the figures I provide; mark missing data as [REQUEST FROM SELLER]. This is general information, not financial or legal advice; I will review the deal with an accountant and attorney before committing.
Highlighted [brackets] are blanks to replace with your own details.
Fill in the blanks and use this promptMore Finance & Accounting prompts
What to fill in
- WHAT IT DOES, location, years operating, number of employees
- price, what is included, seller financing, earn-out
- STATED REASON
- my experience, whether I will run it, how I will finance it
- REQUEST FROM SELLER
How this prompt is built
This prompt follows the RTF structure (Role, Task, Format). RTF tells the model who to be, what to do and what shape the answer should take. It is the quickest structure that still gives noticeably better results than a bare request.
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