Essentially when you are looking to buy a start-up, you are looking to buy their R&D or IP that you can’t easily/quickly build for yourself. You should be looking to understand the overall market, the gap that this start-up may or may not fill and the market potential for this new product/service. You should also look at whether you can provide the start up with what it takes to translate it from it’s infancy into a huge success. Cultural fit is also important because sometimes start-ups have a very strong culture that is important to keep in tact. Also, as mentioned above, looking to see if there are any hidden huge liabilities or risks that may come to bite you later is important.