Picking an epublisher is a bit trickier than picking a traditional New York publisher because there are so many and their methods are so different.
To start your search, first check out review sites and look for reviews of novels similar to yours and see which ones get the praise. If you can't tell an ebook publisher from one of the traditional publishers, use Google to check out the publisher. Soon, you'll recognize publisher names.
You can also ask about at various online writing groups and sites where writers hang out. Some clueless types hype their very poor publishers so don't take everything you hear as correct.
When you find likely publishers, check out their site. Look at the kinds of books they sell.
If your book is straight fantasy, you may regret a publisher which emphasizes romance on its home page or has a very small amount of fantasy because you'll have difficulty selling to the fantasy crowd even if your book is a perfect example of a great fantasy. The SF/fantasy crowd tends to be snobs and run in the opposite direction if they associate your publisher with romance.
Another way to check out epublishers is to see if the publisher's books are available in a wide range of formats and at other sites besides their website. Without exception, my ebooks sell worst at the publisher's site than anywhere else because readers prefer the one-stop shopping of places like Amazon Kindle.
Go to the main venues like Amazon Kindle and see who is selling the most books in your genre. (The lists can be arranged in best-selling order.)
Go to publisher sites and read their guidelines and their posted contract. Compare the contract to EPIC's model contract. (http://www.epicauthors.com/) Also, look at EPIC's "Red Flags" article. Links to both can be found under "Helpful Items" on the left side of the site.
Read a number of the publisher's books, or at least, the posted promotional chapters. Are there grammatical and spelling errors? Are the books bad? If so, find another publisher.
Also, look at their covers. Would you want a cover like that? Do the covers fit the genre of the book?
Once you get a few possibilities, ask about them on listservs where authors congregate. Most of us will warn you away from the crooked and inept publishers. Also, check them out at Preditors and Editors. http://www.anotherealm.com/prededitors
You'll soon discover that the biggest epublishers with the best reputations are closed to submissions most all the time. Their stable of writers can produce more than enough books for them without dealing with the slush pile.
But there are new publishers who are more than eager for good material. Unfortunately, they usually don't have a track record so you really don't know what you're getting in to.
All this research won't guarantee a safe passage through the stormy waters of publishing, I've had a few disastrous publishers who have lost distribution after I've signed with them or who have proven to be inept, but publishing is like life. Sh*t just happens despite whatever we do.
TOMORROW: I finish this series by talking about self-publishing resources. Thursday, I will post my weekly "Links of Interest."