Key Questions Buyers Ask When You’re Selling Your Business
May 7, 2025
“I’m Just Not Ready…”
June 24, 2025One of the most important—and often underestimated—steps in any successful merger and acquisition (M&A) process is the creation of a targeted list of potential buyers. These buyers may be strategic or financial in nature, but the key is identifying those with the highest likelihood of interest, synergy, and financial capacity.
This list becomes the foundation for marketing the business. It’s how we determine who will receive the teaser (a one-page anonymous summary of the company) and, if qualified and interested, the Confidential Information Memorandum (CIM). But more than that, it’s the roadmap for the entire outreach process. A great target list doesn’t just help sell a company- it helps sell it for maximum value, on the right terms, to the right buyer.
You can do everything else right in an M&A engagement—create a beautifully written CIM, run a well-timed process, have strong financials—but if you don’t reach out to the right companies, you risk wasting everyone’s time. Worse yet, you may fail to generate real competition, which is essential to achieving the best price and deal structure.
Think Like Goldilocks—The List Must Be “Just Right”
A buyer list that’s too short may miss ideal candidates. A list that’s too long becomes diluted and unfocused, increasing the risk of poor outreach or confidentiality breaches. Like Goldilocks testing the porridge, the list has to be “just right”— carefully crafted to reflect the business’s size, industry, geography, strengths, and the owner’s goals.
This “just right” approach is based on experience, data, and deep research. It’s why we don’t take shortcuts, and why we don’t rely on generic third-party list providers who don’t know the seller, their goals, or their industry.
Why We Build Buyer Lists In-House (and Why That Matters)
Many M&A firms outsource target list development to third-party researchers. While that might be efficient on the surface, it often results in low-quality lists with limited relevance. We believe this is a mistake.
At our firm, we conduct all target list generation in-house. Why? Because no one understands the client’s business like the advisors working directly with them. We take the time to truly understand what makes the company valuable, what kind of buyer will be most attracted to it, and what kind of post-sale outcomes the owner wants.
This hands-on, customized approach helps us avoid “cookie-cutter” outreach and ensures we’re connecting with buyers who genuinely align with the client’s business. It also shows respect for the owner’s legacy—an important, often emotional consideration that should never be overlooked in the M&A process.
The Two Core Buyer Profiles
A well-built target list usually includes a strategic mix of two major buyer categories: strategic buyers and financial buyers. Each has its own advantages.
Strategic Buyer Target List
Strategic buyers are operating companies—often in the same or adjacent industries—that could benefit from acquiring the seller’s business to gain market share, access new geographies, expand their product lines, or realize synergies.
The goal is always to identify companies where 1 + 1 = 3—where the strategic value of the deal exceeds the sum of its parts.
Financial Buyer Target List
Financial buyers typically include Private Equity (PE) firms, Family Offices, and Independent Sponsors. These entities often look for businesses with strong EBITDA (usually $2 million or more), stable cash flows, and growth potential.
What makes financial buyers attractive is their capital resources and acquisition experience. Many already own “platform” companies in specific industries and are actively looking for add-on acquisitions that align with their investment thesis.
In this way, financial buyers can function a lot like strategic buyers—particularly when they are acquiring for a portfolio company. You’re essentially selling to a strategic operator with the backing and resources of a sophisticated financial institution. That’s often a best-of-both-worlds scenario for the seller.
Moreover, financial buyers are usually more flexible on ownership transitions. For example, if a business owner wants to retain a minority stake or remain involved for a few years post-sale, many PE firms will welcome that structure.
A Crucial Step in a Larger Process
Target list generation may seem like a tactical task, but it is truly one of the most strategic elements in the entire M&A process. Done correctly, it drives buyer engagement, competitive tension, and ultimately a better deal outcome for the client.
Our Client’s Input and Final Approval
Our client often has very good insight as to who they believe are the best strategic buyers. They may have worked with these companies in the past or have known about them over the years. The most important thing to remember is that this process is a cooperative effort and we work closely with our clients to not only participate in adding targets or in some cases vetoing a particular target for a variety of reasons. Lastly, we ask our clients to approve the final target list prior to going to market.
If you’re considering a sale or simply exploring your options, we’d be happy to talk. Our team can explain how we approach buyer research, how we ensure confidentiality, and how a smart target list can be the catalyst for a successful transaction.
Our goal is to Maximize the Value of our Client’s life’s work.
Interested in learning more? Contact us for a confidential consultation.
Steven Pappas, M&A MI
Partner, Managing Director
Touchstone Advisors
860-669-2246
spappas@touchstoneadvisors.com
