When someone asks me to look at a business they are considering buying in Mallorca, the conversation usually starts with what the seller or agent has presented: revenue figures, location, a general narrative about potential. That is the starting point, not the assessment.
The gap between what is presented and what is verifiable is where the risk sits. These are the questions I would want answered before committing.
What Is Actually Being Sold?
This sounds elementary, but it is frequently unclear. A "business for sale" in Mallorca may mean the transfer of a company with its contracts, licences, staff and obligations. Or it may mean the sale of certain assets — equipment, stock, perhaps a lease assignment — without the legal entity. The distinction matters for liability, for tax, for what you inherit and for what you need to create from scratch.
Operating licences are often attached to the premises or the entity, not to the owner. Whether those licences transfer, and under what conditions, is a question that needs a clear answer before anything else proceeds.
The lease is frequently the most valuable and most fragile part of the transaction. Its remaining term, renewal conditions, landlord consent requirements, permitted-use clauses and rent-review mechanisms determine whether the business has a stable foundation or a ticking clock.
The Gap Between Presented and Verifiable Revenue
Revenue figures in the presentation document are the seller's version of the business. Verifiable revenue — supported by tax filings, bank statements, point-of-sale data and declared VAT — is the version that matters.
In some sectors in Mallorca, the gap between presented and declared revenue can be significant. This is not a judgement — it is a practical reality that affects the price you should pay and the revenue you can realistically expect to declare as the new owner operating compliantly.
Seasonality makes the numbers more complex. A business showing strong annual revenue may be generating almost all of it in five months. The cost structure, however, runs for twelve. Understanding the monthly cash-flow pattern — not just the annual total — is essential.
What Happens When the Owner Leaves?
Many small businesses in Mallorca are built around the owner's personal relationships: with customers, with suppliers, with staff, with the landlord, with the local community. When the owner leaves, some of those relationships leave too.
The question is which ones. If the head chef leaves with the owner, the restaurant is not the same restaurant. If the key supplier relationship was personal, the terms may change. If the landlord agreed to favourable conditions because of a personal relationship with the current tenant, that goodwill may not transfer.
This is not always visible in the documents. It requires asking the right questions and, where possible, spending time in the business before the transaction.
Staff Documentation and Compliance
Inheriting staff means inheriting their contracts, their accrued rights, their social security obligations and any outstanding issues. In Spain, employment protections are significant. Understanding exactly who is employed, on what terms, with what history, is not optional due diligence — it is a financial and legal necessity.
Are all staff properly documented? Are social security contributions current? Are there any outstanding labour disputes or claims? What are the severance obligations if restructuring is needed? These questions have direct financial consequences that can materially affect the value of the transaction.
Supplier Relationships That Exist Only with the Previous Owner
Supplier terms — pricing, payment conditions, delivery priority, exclusivity — may be informal arrangements that exist because of the current owner's history and reputation. A new owner starts with the published terms, not the negotiated ones.
For some businesses, the difference between the owner's supplier terms and the standard terms changes the margin structure significantly. This needs to be identified and factored into the valuation.
What Do the First 90 Days Actually Look Like?
The transition period after an acquisition is where most of the practical risk concentrates. The handover of supplier relationships, the staff's response to new ownership, the operational learning curve, the administrative requirements — all of these happen simultaneously while the business needs to continue serving customers.
Having a realistic plan for the first 90 days — not an optimistic one — is the difference between a controlled transition and a crisis. What needs to happen in week one? What can wait until month two? Where is external support needed? What are the early warning signs that something is not working?
The Purpose Is Not to Find Reasons to Walk Away
Asking these questions is not about finding fault. It is about understanding what you are buying, what it is actually worth, and what needs to happen after the purchase to protect your investment.
Some of these questions will produce reassuring answers. Others will identify risks that need to be addressed — in the price, in the contract terms, in the transition plan, or in the decision to proceed at all.
The value of asking them before committing is that the answers cost time and attention. Not asking them costs money.