Questions to Ask During Acquisition
Questions for the people running an acquisition, on either side of the table: what diligence actually shows, which numbers rest on assumptions, who has to stay, what integration will cost, and how the terms allocate risk.
The questions
Open any question for the note
Why are we buying this company rather than building the same capability ourselves?
Why ask it
Build-versus-buy is the only comparison that prices a deal. If nobody has estimated what building the same thing would cost and how long it would take, the multiple is being justified by narrative rather than by an alternative.
Who inside the target wants this deal, and who does not?
Why ask it
A founder who wants out, a board forcing a sale and a management team that fought the process produce three very different post-close years. An answer of everyone is aligned usually means the second tier has not been told yet.
What does the quality of earnings work show about revenue that will not repeat?
Why ask it
This separates revenue that recurs from contracts that landed once and from accounting timing that flatters a period. Resistance to a quality of earnings review tends to point straight at the soft numbers.
Which customers account for the largest share of revenue, and do their contracts survive a change of control?
Why ask it
Concentration and change-of-control clauses interact. If the top handful of accounts can terminate at close, you are buying an option on their goodwill rather than a book of revenue.
Which parts of the price depend on synergies, and who owns delivering each one?
Why ask it
Cost synergies can be checked against headcount and contracts. Revenue synergies usually cannot. A synergy with no named owner and no date is a price increase agreed in advance.
Which people does this business actually run on, and what keeps them for the next two years?
Why ask it
Retention aimed at the org chart misses the people who hold the operation together, often two levels down. A useful test is who would have to be replaced within a month if they resigned tomorrow.
What do the target's margins look like once its costs sit on our cost base?
Why ask it
Standalone margins move when benefits, salary bands, insurance and compliance costs are restated at acquirer levels. Sellers rarely present this version, and it is the version you will report.
What liabilities are we assuming: litigation, tax exposure, warranty, environmental, unfunded obligations?
Why ask it
Assumed liabilities are where an expensive deal becomes a bad one. The dangerous category is exposures that are known but unquantified, because those get pushed into representations instead of into price.
What would it cost to move the target onto our systems, and who has looked?
Why ask it
Much of integration cost hides in this answer. Unsupported software, shared logins and one undocumented database will consume engineering capacity that was earmarked for growth.
Which regulatory approvals or notifications does this deal trigger, and what is the realistic clearance timeline?
Why ask it
Clearance timing changes the deal, not only the paperwork. A long review means months in which the two businesses cannot be run as one and any key employee can leave freely.
How is the consideration split between cash, stock, earnout and escrow?
Why ask it
Structure shows who carries which risk. Earnouts move risk to the seller and often create an incentive to run the business toward a single short-term number.
Was any of the target's intellectual property built by contractors or on open source components?
Why ask it
Work done without written assignment, and code carrying copyleft obligations, does not transfer cleanly. This is a common and expensive gap in smaller targets and it surfaces late if nobody asks early.
Who runs the acquired business on day one, and which decisions still route to us?
Why ask it
Ambiguity here creates a vacuum that the loudest manager fills. Ask for the list of decisions that stay local in writing, because verbal autonomy erodes within a quarter.
What are we going to stop doing at the target, and when do we say so out loud?
Why ask it
Every acquisition ends something: a product, a brand, an office, a set of roles. Saying it late is what destroys trust, because staff work out the answer before it is announced.
What will integration cost in cash and in senior attention, and where does that sit in the model?
Why ask it
Management attention is scarcer than money and is almost never budgeted. A model with no integration line and no corresponding cut to other projects is incomplete rather than optimistic.
Which two or three assumptions, if wrong, turn this into a loss?
Why ask it
Naming them makes the deal testable afterwards. If the answer is a list of ten, nobody has separated what is load-bearing from what is merely uncertain.
What do we tell the target's staff, our staff and its customers, and in what order?
Why ask it
Sequencing matters more than wording. Customers who hear it from a competitor, and employees who hear it from customers, both conclude that nobody is in control.
How will we know in twelve months whether this worked?
Why ask it
A success test written before close is the only protection against the deal being judged retrospectively by whatever happened. Vague answers now predict vague accountability later.
What would make us walk away between signing and close?
Why ask it
Walk-away conditions are far easier to define before anyone is emotionally committed. Deals rarely die on new information; they die because nobody agreed in advance what would count as disqualifying.
Who is still accountable for this deal a year from now?
Why ask it
Deal teams disband and advisers move on. If the person answering will not be measured on the outcome, their confidence about the assumptions costs them nothing.
Working through an acquisition
Practical guidance for the conversation itself
How to run the questioning
Ask for the source, not the summary
Management presentations are built to survive questions. Ask for the underlying document: the contract with the assignment clause, the aged receivables list, the actual employment agreement. Where a source cannot be produced, treat the claim as an assumption.
Separate price questions from plan questions
Diligence answers what the business is worth. Integration planning answers what it will take to keep it worth that. Teams that mix the two end up paying for synergies they then fund a second time out of operating budget.
Put the answers in a live risk list with owners
Every unresolved answer becomes either a price adjustment, a representation and warranty, an escrow item, or an accepted risk. If it becomes none of those, it has been forgotten rather than resolved.
Who to ask, and what only they can tell you
- Second-line managers: where the process breaks and who really approves work.
- Finance staff below the CFO: which reports are manual, and which numbers get adjusted before they are shown.
- Departing employees and recent leavers: the reasons for turnover that exit interviews rarely capture.
- The target's largest customers, once permitted: whether they intend to renew and what they think they are buying.
- Engineering or operations leads: what would break first if volume doubled.
Where acquisitions go wrong
Deal momentum replacing judgment
Once fees have been paid and a board has been told, the cost of stopping feels higher than the cost of continuing. Agreeing walk-away conditions in writing at the start is the practical defense.
Retention offered too late
The people you most need usually start receiving outside calls at announcement, not at close. Retention decided during integration planning arrives months after the decision has effectively been made.
Culture treated as a soft topic
The hard version of the culture question is concrete: how decisions get approved, how people are paid, what gets someone promoted, and what gets someone fired. Compare those four and you have the answer.