When investing in a private company, you should look at such financial information as to how well the company generates profits, how well it manages cash and expenses, how well it acquires new clients and keeps old clients, how well the company gets paid, and how well the company performs year-over-year in generating revenues. You should also see how much cash flows from one calendar year to the next, as companies will often manipulate the income received at the end of a year in order to improve its subsequent year’s stated financials. You should also understand the current return on invested capital. If you think of all cash used to fund the business as an annual investment with a return, it is good to investigate if this return is increasing or decreasing over time. Also pay close attention to the pricing models used by the business, and compare them against other competitors to see if they are accurate or deficient in some way. Since the greatest expenses of small companies tend to be employees and benefits, you should analyze its per-employee profitability as well as its per-employee productivity. Also review the costs of health care and retirement benefits.