This note outlines the questions to consider when appraising a business. You will find this helpful when you are looking at other businesses with view to investing in the business or buying it outright. You may find some of the questions appropriate to ask yourself if you are thinking of launching a new company in your target market. And you will find this helpful if you are yourself looking for investment because the financial institution will be asking many of these questions of your business.
Note that appraisal is not the same as ‘due diligence’. An appraisal is what you do to decide whether there might be a business case to invest in or buy a business. Due diligence is generally used to cover the questions that you might ask later to ensure that the business is honest, legal decent and truthful. So in appraisal, you would not ask for evidence to support the answers that you are given but in due diligence, you will want to be sure that what you have been told is the truth, so will want more evidence.