My Check List for Buying a Company

1. Must not be a loss making company.
2. Must not be a PSU.
3. Must be able to remain profitable for next 15-20 years to come.
4. Must have zero or very low debt.
5. Must not be a capital intensive business.
6. Its Product and services must have competitive advantages i.e. 10x better than its competitors.
7. It must be very difficult to copy its business by any other company.
8. Value migration must not be happening or to going be happened in its business in next 10-15 years.
9. Technological or habitual disruption factor should not be there.
10. Customer loyalty must be there in the products/services offered by the firm (by force or choice )
11. Entry Barrier must be there in the business so that other companies can’t take over its business or take its future business opportunities.
12. Pricing power must be there with the company for its products or services i.e. the company must have dominance over its customer,distributor,retailer
13. There must be sufficient head room to grow its business.
14. The company must have the ability to throw cash to the share holders (may be in a longer period of time)
15. Must be professionally run company.If it is 1st or 2nd generation company,then 1 or 2 family members of the promoter in the board is okay.
16. All the key positions in the company should not be held by family members.
17. The company should be such that ,any idiot can run it.
18. Management should be good at capital allocation.
19. Stock must be available at good valuation.
20. If FIIs/DIIs have less holding,then it is better.

Its a learning process …and will be refined over time.https://themangoinvestor.blogspot.com/2022/07/my-check-list-for-buying-company.html