Thinking of Selling Your Business? Here’s How a Buyer Will See Your Company

If you’re a business owner, selling your company is likely the biggest, most important transaction of your life. You only get one shot to do it right, and success often comes down to understanding one simple truth: you need to see your business through a buyer's eyes.

Many owners, especially those with profitable businesses in the $1M–$20M range, find the sales process daunting. You might even be one of the many who have tried to sell before, only to end up frustrated by a lack of results or misaligned expectations. Our approach is different. We believe in getting on the same page from day one, creating a realistic, goal-oriented strategy before going to market. This ensures that when we do engage with buyers, everyone is positioned for success.

This guide will walk you through the exact process a sophisticated buyer follows, giving you the insights to prepare your business, anticipate their questions, and maximize its value.

The Buyer's Blueprint: What They Look For First

Before a serious buyer even looks at your financials, they’re building an "acquisition blueprint." This is their strategic filter, defining their ideal industry, company size, and financial profile. Trying to sell to a buyer without understanding their blueprint is like speaking a different language. You’ll talk past each other, and the deal will go nowhere.

Your first job as a seller is to understand what kind of buyer your business is a perfect fit for. This clarity helps you target the right audience and avoid wasting months on conversations that were doomed from the start.

What Are the Buyer’s Goals?

A buyer isn't just buying a company; they're buying a future. The first thing they ask themselves is, "What's my 'why'?" Their answer dictates everything.

• Is the buyer a hands-on operator or a passive investor? An operator wants a business they can run and grow. A financial investor wants a company that runs itself, with a strong management team in place.

• What does success look like for them? Are they looking to build a legacy, achieve a specific financial return, or gain a strategic foothold in a new market?

• What are their non-negotiables? These could be location, work-life balance, or a specific company culture.

As a seller, you need to be brutally honest with yourself: does your business align with what a logical buyer wants? For example, if your business requires your personal involvement 80 hours a week to succeed, it’s a tough sell for a buyer seeking a balanced lifestyle or a portfolio investment. This is a common stumbling block, and preparing for it is key..

The Investment Thesis: A Buyer's North Star

Once a buyer clarifies their goals, they formalize them in an investment thesis. This is typically a one-page document outlining the exact criteria a business must meet. It’s their most powerful tool for screening opportunities.

A strong thesis is specific and measurable. It turns vague ideas like "I want a profitable company" into concrete parameters. It allows a buyer to say "no" to 99% of opportunities so they can focus all their energy on the 1% that are a perfect fit.

Even the biggest companies think this way. When Alphabet bought Wiz for $32 billion, it was to dominate cloud security. When KKR acquired OSTTRA for $3.1 billion, it was a strategic play to own financial market infrastructure. They buy for strategic reasons, and you need to frame your business's value in those same terms, no matter the size.

For a seller, understanding the buyer’s thesis is like getting a copy of the test questions before the exam. It tells you exactly what you need to highlight about your business.

Here’s what a real-world investment thesis from a strategic buyer might look like:

• Industry: B2B Professional Services, specifically marketing agencies.

• Geography: Based in the United States, with a remote or hybrid workforce.

• Financial Profile: $2M to $10M in annual revenue with at least 15% EBITDA margins.

• Customer Base: No single client makes up more than 20% of total revenue.

• Reason for Sale: The owner is retiring, allowing for a smooth transition.

When you can present your business in a way that directly matches these criteria, you immediately signal to brokers and buyers that you are a serious, prepared seller. This initial strategic positioning is the absolute bedrock of a successful sale.

How Buyers Find and Scrutinize Opportunities

With their blueprint set, a buyer begins the hunt. But here’s something most owners don’t realize: the best buyers rarely hang out on public business-for-sale websites. Those listings are often picked over. The highest-quality deals are found through private networks and well-connected M&A advisors.

This is why preparing your business to be "found" by the right people is so critical. A smart buyer cuts through the noise to find real contenders, and you want to be on that short list.

Where Serious Buyers Look for Deals

With their blueprint set, a buyer begins the hunt. This is why preparing your business to be "found" by the right people is so critical. A smart buyer cuts through the noise to find real contenders, and you want to be on that short list.

• They Tap Into Their Network: Sophisticated buyers talk to trusted colleagues, suppliers, and industry experts. They know that many great owners are quietly thinking about selling but haven't made a move yet.

• They Work With M&A Advisors: A good M&A advisor is a buyer's best friend. They live and breathe deals and bring confidential opportunities that perfectly match a buyer’s thesis. Being represented by a firm like Exit Game Plan puts you directly in this deal flow.

• They Make Thoughtful, Direct Approaches: Sometimes, a buyer will identify a company they admire and make a respectful inquiry. Being prepared for such an approach can put you in a powerful negotiating position.

To position your business effectively, it helps to know where capital is flowing. Understanding M&A market trends can give you an edge in your conversations.

M&A Market Hotspots: Where is the Action?

Metric	The Americas (Primarily US)	Europe	Key Sector Growth (Global)
H1 2024 Deal Value	$724 billion	$310 billion	Varies by sector
Year-Over-Year Growth	+23%	-7%	Strong gains in Energy & Industrials
Market Sentiment	Optimistic, driven by private equity and corporate cash reserves.	Cautious, influenced by geopolitical and economic uncertainty.	Healthcare, Technology, and Energy are seeing sustained buyer interest.

The 23% jump in deal value in the Americas shows a robust market. For you, the seller, this means more potential buyers but also more competition for their attention. Knowing if your sector is "hot" helps you frame your company’s story.

The Buyer's First-Pass Review: Reading Your CIM

When a buyer shows interest, they’ll receive your Confidential Information Memorandum (CIM). This is your sales brochure. A smart buyer knows the CIM is designed to put your business in the best possible light. Their job is to read between the lines to spot potential risks.

A buyer uses your CIM to figure out what isn't being said. Anticipating their questions and addressing them proactively in your materials builds immense credibility.

Here are the critical questions a buyer will ask themselves when they review your CIM:

• Is revenue highly concentrated? If one or two clients make up more than 20-30% of your revenue, that's a huge red flag for them. You need a plan to address this perceived risk.

• Are *you* the business? A buyer will look for signs of "owner-centricity." Do you handle all the key sales? Manage the top client relationships? If so, they see a business that might fall apart without you. Building a strong management team is one of the most powerful ways to increase value.

• Are your financial claims realistic? They will scrutinize your "add-backs." While some are legitimate (like your personal salary), overly aggressive adjustments will immediately damage your credibility.

• Why are you *really* selling? Your CIM will say "retirement," but they'll dig deeper. They want to be sure you aren't trying to get out before a market disruption, declining performance, or a major operational issue comes to light.

Passing this initial screen is everything. It’s what separates the businesses that get serious offers from those that languish on the market.

How a Buyer Determines Your Company's Worth (And What You Can Do About It)

You’ve found a buyer who loves your company's story. Now comes the moment of truth: what is your business actually worth?

This is where your emotional investment in years of sweat equity meets a buyer's cold, hard focus on future cash flow. The key to bridging this gap is a logical, well-supported valuation and a deal structure that works for both sides. Many deals fall apart here because of misaligned expectations.

The Math Behind the Multiple

Most small to mid-sized businesses are valued using a multiple of their earnings. Buyers speak in two main acronyms: SDE and EBITDA.

For smaller businesses (typically under $1M in profit), Seller’s Discretionary Earnings (SDE) is the standard. It represents the total financial benefit available to an owner-operator: net profit plus your salary, benefits, and any personal expenses run through the business.

For larger, more complex businesses, EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is the metric. It shows the company's raw operational profitability. A buyer will value your business at a multiple of one of these figures, for example, 4x EBITDA.

But that multiple isn't arbitrary. It’s driven by factors you can influence:

• Recurring Revenue: Predictable, subscription-based income is worth far more than one-off project work.

• Customer Concentration: A diverse customer base significantly reduces a buyer’s risk.

• Management Strength: A business that runs without your daily involvement is the holy grail for most buyers.

• Growth Potential: Clear, tangible opportunities for expansion will directly increase your multiple.

This is why getting a professional business valuation is so critical. It grounds the conversation in reality, using hard market data and industry benchmarks, not guesswork. It's the best tool to align expectations and defend your price.

How a Buyer Structures a Winning Offer

Once a buyer has a valuation, they’ll make an offer via a Letter of Intent (LOI). While non-binding, the LOI is the roadmap for the entire deal and a critical test of alignment.

A thoughtful LOI from a buyer is a great sign. It shows they're serious and have thought through the details. How you respond sets the tone for the rest of the negotiation.

A strong LOI will clearly outline:

• Purchase Price: The total offer.

• Deal Structure: How they'll pay (cash, seller financing, earn-out, or a mix).

• Financing Contingency: A clause stating the deal depends on them securing a loan.

• Due Diligence Period: Typically set at 30 days, giving the buyer time to verify your information and confirm the deal terms. This period can be extended if the buyer demonstrates a good faith effort to move toward a signed asset purchase agreement and closing.

• Exclusivity Clause: An agreement that you won’t shop the deal around while the buyer conducts due diligence. At Exit Game Plan, we generally advise granting exclusivity only to buyers who have secured funding, for example, an SBA-backed buyer should have a lender term sheet in hand before requesting exclusivity. In some cases, such as with search fund buyers, we recommend holding off on exclusivity until they demonstrate clear progress in securing financing. Ultimately, the decision rests with the seller, but our guidance is to protect your negotiating position until the buyer’s ability to close is verified.

Surviving Due Diligence: The "Trust But Verify" Phase

Your LOI is signed. This is a huge milestone, but now the real scrutiny begins. Welcome to due diligence, the exhaustive process where the buyer and their team pull back the curtain to make sure your business is everything you've presented it to be.

This isn’t personal; it's prudent. A buyer is protecting their investment. They, along with their attorney and accountant, will dig into every financial record, legal document, and operational process to uncover any hidden risks. As a seller, being organized and transparent here is your best strategy for keeping the deal on track.

The Financial Deep Dive: Defending Your Financials

Due diligence always includes a close review of your financials, and it goes beyond just handing over tax returns. Buyers (and their CPAs) will analyze your historical earnings to validate your EBITDA or SDE and test every adjustment or “add-back” you’ve claimed.

In larger transactions, particularly $10 million and up, buyers may hire an accounting firm to conduct a formal Quality of Earnings (QoE) report, a detailed, third-party audit of your earnings and adjustments. At lower transaction levels, buyers often conduct this review themselves or with their CPA.

Regardless of deal size, the principle is the same: aggressive or poorly documented add-backs are a red flag and often lead to price reductions. The best defense is clean, well-supported financials that tell a clear and credible story.

Legal and Operational Scrutiny: Finding the Skeletons

While the CPAs are in the spreadsheets, the buyer’s due diligence team will do a deep dive into other areas of your business.

Your legal house needs to be in order. They will review:

• Customer and Vendor Contracts: Are there "change-of-control" clauses that could terminate key contracts upon sale?

• Employee Agreements: Do key employees have contracts and non-competes?

• Leases and Property: Is your lease secure with options to renew? An insecure lease is a classic deal-killer.

• Litigation History: Are there any past or present lawsuits a buyer would inherit?

Operationally, they'll assess things not on a balance sheet. What's your real customer churn rate? Do you depend on a single supplier with no backup plan? These are vulnerabilities a buyer will price into their offer.

As you can see below, the buyer’s diligence runs in parallel with their effort to secure financing. Your preparedness helps them, which in turn helps you.

As buyers conduct diligence, their lenders are right there with them, making sure your business is a sound investment for their loan.

Due diligence is a process of discovery. Every issue a buyer finds becomes a potential negotiating point. Your goal is to minimize these surprises through upfront preparation.

I remember working with an owner selling his light manufacturing company. During diligence, the buyer discovered his biggest customer, representing 35% of revenue, was on a decade-old handshake agreement. No bank would finance a deal with that risk.

This didn't kill the deal. Instead, it changed the structure. The buyer negotiated a lower cash payment at closing, with the rest of the price tied to an earn-out contingent on retaining that customer for two years. The seller still had a path to his full price, and the buyer was protected. That’s the power of proactive problem-solving. It gives you the tools to tackle issues and keep the deal moving toward the closing table.

The Final Stretch: Financing and Closing the Deal

While a buyer is deep in due diligence, they are simultaneously working to secure financing. Their lenders need to be just as confident in your business as they are. Your organization and transparency are critical to helping them get their loan approved, which is essential for you to get paid.

In the U.S., the Small Business Administration (SBA) 7(a) loan is a workhorse for many acquisitions. Buyers like them because they often require lower down payments (10-15%) and offer longer repayment terms, which helps their post-close cash flow. For you, the seller, this means the buyer may be able to afford a higher price. The trade-off is a rigorous approval process that requires a mountain of your business's documentation.

What You Need to Provide for a Buyer’s Loan

To help your buyer get their loan, you’ll need to have your records in order. Being prepared to provide these documents quickly will speed up the entire closing process.

A buyer will need from you:

• Business Financials: At least three years of your business tax returns and clean profit and loss statements.

• Acquisition Details: They'll need a copy of the signed Letter of Intent (LOI) and, later, the draft purchase agreement.

• Your Cooperation: Be ready to answer questions from the bank’s underwriters about your operations, financials, and transition plan.

Another powerful tool is seller financing. This is where you agree to carry a note for a portion of the purchase price. Offering seller financing is one of the strongest signals you can send about your confidence in the business's future. It makes your business more attractive and can often lead to a higher overall valuation.

For certain types of companies, like e-commerce, the financing landscape has its own quirks. Our guide on selling e-commerce businesses has insights that can help you understand what buyers in that space are looking for.

From Final Agreement to Closing Day

Once financing is approved and diligence is complete, all focus turns to the definitive Purchase Agreement. This is the final, legally binding contract that outlines every detail of the transaction. Your M&A attorney is your champion here, ensuring every term protects your interests.

This document formalizes the final price, payment structure, your transition plan, and any non-compete agreements. It’s dense, but it’s the legal foundation that ensures you get what you negotiated for.

There is a strong trend of U.S. buyers acquiring U.S. companies. M&A activity in the Americas saw domestic investment surge by 16%, from $714 billion to $830 billion. A massive 91% of this capital stayed within the Americas, showing that buyers see value and reduced risk in home markets.

This trend is good news for U.S. business owners, as it signals a large and active pool of domestic buyers. You can discover more about these M&A trends on pwc.com.

Finally, you reach closing day. This is the moment documents are signed, funds are transferred, and you hand over the keys. After months of preparation and negotiation, it’s the official start of your next chapter. With a well-negotiated agreement, you can walk away with confidence, knowing you managed the most important transaction of your life successfully.

Common Questions From a Seller's Perspective

Selling a business is rarely a straight line. It’s natural to have questions and concerns, especially around timing, costs, and deal structure. Addressing these upfront will give you the confidence to navigate the process effectively.

Here are some of the most common questions we hear from business owners like you, answered from our experience guiding them to successful exits.

How Long Does It Typically Take to Sell a Business?

This is the million-dollar question. While every deal is unique, a well-prepared business owner can typically expect the process to take 3 to 12 months from the decision to sell to the final closing.

That said, we’ve also closed deals in as little as 30 to 45 days from listing to closing when the seller was well-prepared, the buyer was decisive, and the fit was clear. While not typical, it shows what’s possible with the right preparation and strategy.

The key to a faster, smoother process is upfront preparation. Having a professional valuation, clean financials, and a clear understanding of your ideal buyer before you go to market can significantly shorten the timeline.

Here’s a realistic breakdown of the phases:

• Preparation & Valuation (1–2 months): This is where you work with an advisor to get your financials in order, prepare marketing materials, and establish a defensible asking price.

• Marketing & Buyer Screening (2–4 months): Your advisor confidentially markets the business, vets potential buyers, and facilitates initial conversations.

• Negotiation & LOI (1 month): You negotiate terms with a serious buyer and sign a Letter of Intent (LOI).

• Due Diligence & Financing (2–3 months): The buyer and their lenders conduct an in-depth review of your business. Your organization and transparency are key here.

• Legal & Closing (1–2 months): Attorneys for both sides draft and finalize the definitive purchase agreement, leading to the closing day.

What Are the Most Common Deal-Killers to Avoid?

Many deals that look promising on paper can fall apart. Most of the time, it's due to avoidable mistakes. Knowing the pitfalls ahead of time is your best defense.

The most successful sales we see are ones where the owner prepared for the sale long before they ever spoke to a buyer. Addressing these issues proactively is the single best way to protect your deal and your valuation.

That said, these issues don’t always kill a deal outright, buyers will still buy businesses with some of these challenges. But they do affect valuation and terms. A good advisor helps you understand how these factors impact the price, and what strategies you can use to overcome them and still get a deal done.

Here are the red flags that scare buyers away:

• Owner Dependency: If the business can't function without your personal involvement in sales, operations, or key client relationships, buyers see immense risk.

• Sloppy Financials: Inaccurate books, aggressive or indefensible add-backs, and a lack of clear reporting will destroy a buyer's trust instantly.

• Customer Concentration: If a single customer accounts for more than 20% of your revenue, buyers will get nervous. Diversifying your customer base before a sale is a huge value-driver.

• Unrealistic Valuation: Overpricing your business is the fastest way to ensure it doesn't sell. Starting with a realistic, market-based valuation is non-negotiable for attracting serious buyers.

Is an Asset Sale or a Stock Sale Better for Me?

This is a critical negotiation point with significant tax and legal implications. Understanding the difference is essential to protecting your financial outcome.

In an asset sale, the buyer purchases specific assets of your company—like equipment, inventory, and customer lists—but not the legal entity itself. Your original company (e.g., your S-Corp or LLC) remains, along with any liabilities not explicitly transferred to the buyer.

In a stock sale, the buyer purchases the shares of your company, acquiring the entire legal entity. They get all the assets and, crucially, all the liabilities—known and unknown.

As a seller, you will almost always prefer a stock sale. The reason is primarily tax-driven; for most owners, a stock sale results in paying taxes at the lower long-term capital gains rate, putting significantly more money in your pocket. Buyers, on the other hand, strongly prefer an asset sale because it gives them a clean slate from past liabilities and provides them with significant tax advantages. This point will be a major part of the negotiation. Having an experienced advisor and tax professional is critical to navigate this and structure a deal that achieves your goals.

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The journey to selling your business is complex, but you don't have to go it alone. Having an experienced guide in your corner can make all the difference, helping you maximize value, minimize risk, and achieve the successful exit you deserve.

If you’re thinking about selling now or in the next few years, Carson Bomar & Matt Perkins at Exit Game Plan are here to provide clarity and confidence. We invite you to schedule a confidential, no-pressure consultation to discuss your unique situation and goals.