What to Say on Your First Seller Call

A first seller call is not diligence. It is a filter.

You are trying to answer one question: is this business worth spending time and money on? If yes, you will get serious later with data, a QoE, and reference checks. If no, you want to exit cleanly and keep the relationship intact.

Most buyers mess this up by treating the call like a cross-examination. Sellers do not respond well to that, especially founders who have spent years building the company.

Set the tone

Get permission to ask real questions

Start with a simple frame:

• You are early in process.

• You want to understand the business at a high level.

• If it makes sense, you will request data and schedule a deeper follow-up.

Then ask them to walk you through the story in their words. You will learn more in the first five minutes of uninterrupted narrative than you will from a checklist.

The questions that surface real information

What to ask when you only get one shot

Before the call, skim the CIM and rewrite the financials into a format you can actually read. Note anything odd (revenue swings, margin changes, unusual add-backs, CapEx spikes). Those become your prompts.

Here is the core set I like, in order.

1) Start with earnings quality

This is where deals die later, so surface it early.

• "Are there expenses currently in the income statement that would not continue under new ownership?"

• "Any owner-related items in there (comp, vehicles, travel, family members on payroll) that you would expect to go away?"

This invites add-backs without sounding accusatory. Sellers expect it.

2) Revenue and customer concentration

You are not just asking "how much." You are asking "how stable."

• "What are the top three drivers of revenue?"

• "What changed from 20XX to 20XX?"

• "Can you tell me about your relationship with your top customer? How long has it been in place?"

Avoid "What happens if they leave?" That question is emotionally loaded and rarely gets you a useful answer. You can assess concentration risk later with real data.

3) Margin drivers

Margins tell you the business model, not just profitability.

• "Can you provide some color on the margin movement from 20XX to 20XX?"

• "What typically drives gross margin up or down for you (pricing, mix, labor, materials, utilization)?"

If margins are thin, do not treat it as disqualifying. Treat it as a prompt to understand the machine. Distribution can have low gross margin and still be a great business. A labor-heavy service company with low gross margin might mean pricing pressure or poor job costing. Context matters.

4) CapEx and maintenance reality

You are trying to separate "this is how the business operates" from "we deferred reality."

• "You had a big CapEx year in 20XX. What did you invest in and why?"

• "What does maintenance CapEx look like in a typical year?"

• "Any equipment or facility items you would say are overdue for replacement?"

5) Facilities and related-party items

Real estate and related-party arrangements can distort EBITDA.

• "Do you own the facilities or lease them?"

• "If leased, is the landlord a related party?"

• "Any other related-party arrangements I should know about?"

6) Working capital and seasonality

You do not need a full peg discussion on call one, but you should know if this is a seasonal cash-eater.

• "Is the business seasonal? When do you build inventory or receivables?"

• "Are there times of year where cash gets tight, even if annual profit looks fine?"

What not to ask

Questions that put them on defense

Avoid anything that implies dishonesty or stupidity:

• "Are these financials accurate?"

• "Why are your margins so low?"

• "Is this customer going to leave?"

If you have concerns, log them. Then come back to them once you have data and a relationship.

Close the call

End with momentum and a clear next step

If you like what you heard, say so and keep the ball rolling:

1. Confirm interest and timing.

2. Ask for a small, specific data request (monthly financials, customer concentration, CapEx summary).

3. Set a date for the next call.

If you do not like what you heard, exit cleanly. Thank them, be direct that it is not a fit, and keep the door open.

What's Next

Right after the call, write a one-page summary while it is fresh:

1. What you learned (economics, risks, owner story).

2. What is still unknown (and what you need to see next).

3. Your go / no-go decision and why.

That memo becomes your compass later when the deal gets noisy.