What Do M&A Buyers Really Want?

Successfully selling your business requires more than just the right documents and a lot of business acumen. It also requires empathy. For years, and maybe decades, you’ve looked at your business through the lens of an owner. Now, it’s time to consider what buyers want. For many owners, who are emotionally attached to a company they’ve poured so much into, this is a remarkably challenging proposition. But if you hope to successfully sell a business in Chicago, you must understand what buyers want—especially as M&A becomes more competitive. So what is it buyers are looking for, anyway? 

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A Low-Risk Company 

Buyers don’t want to take on a lot of risk. They want to buy a well-run business, invest time and energy, then grow it into something more profitable. So if your company is struggling, your industry is contracting, or you cannot support your future projections, you are likely to have a much more difficult time selling your company. One of your main goals needs to be assuring the buyer that your company is indeed a wise investment. 

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Lack of Owner Dependence 

For many owners, a business becomes a source of identity. When you’re running your business, this can turn you into a micromanager. That’s a significant problem on its own, that may cause the most qualified people to walk away. But when you put your business on the market, owner dependence is the death knell for sellability. Buyers want to know that they can run your company without you. So work on reducing owner dependence to reduce the risk the buyer undertakes. 

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Well-Organized Processes 

Your business needs to run like a well-oiled machine, with established processes for all basic functions. This shows your company is sustainable, and that your business model will translate well for new ownership. If you don’t have well-designed, well-documented processes, work with your team to get them in place before putting your company on the market. 

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Reasonable Valuation Expectations 

Everyone wants to profit from selling a business, but some owners have wildly unreasonable valuation expectations. They think much larger competitors run comparable businesses, or they assign a value based on their emotional attachment to the company rather than its actual worth. This is a great way to alienate buyers, and to render your business impossible to sell. When you’re contemplating M&A, work with a valuation expert early to assign an asking price. The right expert may also be able to help you generate additional value if you consult with them sufficiently early in the sales process. 

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A Low Stress Sales Process

With so many companies on the market, buyers can walk away if the sale process itself becomes stressful, or if they develop reasons to doubt the owner’s trustworthiness. A low-stress, smooth-moving sale process is critical. The right business broker lends professional credibility to the process, and can help move it along in a way that honors the needs of both buyers and sellers.