How to Evaluate Any Deal in Under 10 Minutes

Deal fatigue is real. When you start actively sourcing acquisitions, you will be exposed to dozens of opportunities a month. Most of them are not worth your time. The challenge is figuring out which ones deserve a deeper look and which ones should be passed immediately, without spending hours analyzing each one.

The 10-minute deal evaluation framework solves this problem. It is a five-question filter that I run on every opportunity before committing any real time or resources. If a deal fails any of the five questions, it gets passed. If it passes all five, it moves to full due diligence. The framework is not a substitute for thorough analysis. It is a gatekeeper that ensures I only spend serious time on serious opportunities.

Question 1: Does It Cash Flow Today?

This is the first and most important question. Is the asset currently generating more income than it costs to own and operate? Not projected income. Not income after your planned improvements. Current, actual, verifiable income.

If the answer is no, pass. You are not in the business of buying broken things and hoping to fix them. You are in the business of buying things that work and making them work better. There are rare exceptions to this rule, but as a default filter, it eliminates the vast majority of bad deals before you waste any time on them.

To answer this question, you need three numbers: gross revenue, total operating expenses, and debt service on the proposed financing. Revenue minus expenses minus debt service needs to be positive. If it is not, the deal does not clear the first gate.

Question 2: Do I Understand the Business Model?

This question is about competence and clarity. Can you explain, in one sentence, how this asset makes money? If you cannot, you should not buy it. Complexity is the enemy of good acquisitions. The more complicated the revenue model, the more places there are for problems to hide.

I have passed on deals that looked financially attractive because I could not clearly articulate the business model after thirty minutes of review. If the revenue depends on a complicated chain of intermediaries, if the cost structure has layers you cannot unpack, or if the value proposition is unclear, those are signals that the asset is more complex than it appears, and complexity means risk.

The best acquisitions are boring. They sell a clear product or service to an identifiable customer at a predictable margin. If you can describe the business model in one sentence and it makes immediate sense, move to question three.

Question 3: What Is the Customer Concentration?

Customer concentration is one of the most underappreciated risks in any acquisition. If more than twenty percent of revenue comes from a single customer, you do not own a business. You own a contract. And contracts can be terminated.

The ideal acquisition has a diversified customer base where no single customer represents more than ten percent of revenue. This means that losing any one customer is painful but not catastrophic. The business can absorb the loss, adjust, and recover.

When customer concentration is high, the entire value of the business depends on relationships that may or may not survive a change in ownership. I have seen deals where the seller's personal relationship with a key client was the only thing keeping the business profitable. Once the seller left, the client followed. That is a scenario you want to identify in the first ten minutes, not after you have closed.

Question 4: Why Is the Seller Selling?

This question is less about the numbers and more about the narrative. A clean reason for selling is a green flag. The owner is retiring. They have a health issue. They want to pursue a different opportunity. They have owned it for fifteen years and are ready for the next chapter. These are all legitimate reasons that do not indicate a problem with the asset itself.

Concerning reasons include: the market is changing, competition is increasing, a key customer is leaving, regulatory changes are coming, or the business requires more capital than the owner can provide. These reasons suggest that the seller is trying to exit before problems become visible in the financials.

You will not always get an honest answer to this question. But the question itself surfaces information. Watch for inconsistencies between what the seller says and what the numbers show. If someone says they are selling because they want to retire but the business has been declining for three years, the retirement story might be covering a deeper problem.

Question 5: Can I Finance This?

The final question is practical. Given your current capital position, credit profile, and lending relationships, can you structure the financing for this deal? A great deal that you cannot finance is not a deal. It is a wish.

This question requires you to have a clear picture of your financing options before you start evaluating deals. Know your available capital. Know your borrowing capacity. Know which lenders you can approach and what they require. Know your maximum comfortable leverage ratio.

When you run the financing question on every deal, it keeps you grounded. It prevents you from falling in love with opportunities that are outside your current capability. And it forces you to think about deal structure early, which often reveals creative financing options that make otherwise impossible deals workable.

The Framework in Action

Here is how a typical ten-minute evaluation works. A deal crosses your desk. You pull up the listing or the broker's summary. You look at the revenue, expenses, and asking price. You calculate rough cash flow and debt service. That is question one. You read the business description and identify the revenue model. That is question two. You look at the customer breakdown or ask the broker for it. That is question three. You note the reason for sale. That is question four. You check it against your capital and financing capacity. That is question five.

Five questions. Ten minutes. One clear decision: pursue or pass. Most deals get passed. That is the point. The framework protects your most valuable resource, which is your time, and ensures that when you do commit to full due diligence, you are working on an opportunity with a real chance of closing.

The full framework, including the scoring rubric and decision matrix, is in Chapter 4 of Buying Wealth. But the five questions above are enough to start filtering deals today.