What’s the secret of finding the best buyer for your business?
April 24, 2025
A Critical Step in the M&A Process: Potential Buyers – Who Makes the Cut?
June 24, 2025And How to Answer Them with Confidence.
Selling a business is a major life and financial decision. Whether you’re retiring, moving on to your next venture, or reacting to external pressures, being well-prepared for a buyer’s questions can mean the difference between a smooth transaction and a stalled deal—or worse, a failed one.
Savvy buyers approach acquisitions with a healthy mix of curiosity and caution. They want to understand not just the financials, but also the story, risks, opportunities, and the people behind the business. Below are some of the most common and critical questions that serious buyers will ask, why they matter, and how sellers can answer them effectively.
1. Why Are You Selling the Business?
This is often the very first question, and it’s not just small talk. Buyers are trying to gauge your motivations and assess whether there’s a red flag you’re not disclosing. Are you retiring? Burned out? Facing health issues? Or are there deeper operational problems?
Honesty is essential. If your reasons are personal (retirement, relocation, or a desire to pursue another opportunity), say so. If there are business challenges—like a loss of a major customer or declining margins—it’s better to disclose them early and pair them with a plan or recent progress. Trying to hide negative information often backfires during due diligence and can torpedo trust.
Pro tip: If you struggle to articulate your “why” with confidence, it may indicate you’re not ready to sell—or at least not ready to lead the process. Buyers can sense uncertainty.
2. Who Are Your Key Managers—and Will They Stay Post-Sale?
One of the biggest concerns for buyers is what happens when the owner exits. Is there a capable leadership team in place to keep the company running smoothly?
Businesses with experienced, loyal, and committed managers are far more attractive to buyers. If your business is too reliant on you personally—or if key people are at risk of leaving—the buyer will either walk away or build protections into the deal (like an earn-out, or seller holdback).
To mitigate this risk: Ensure that key managers have enforceable employment agreements with non-compete and non-solicit clauses.
Consider offering retention or “stay bonuses” to incentivize them to remain post-close.
Begin transferring customer and vendor relationships to senior staff if you haven’t already.
Buyers want continuity. Demonstrating that your team is strong, independent, and staying on will boost valuation and deal certainty.
3. Who Owns the Customer Relationships?
Buyers want to know: Are customers loyal to the company, or to you personally?
If the seller has been the primary face of the business and owns most of the critical relationships, that’s a concern. Customer loyalty might not survive the transition. In those cases, buyers will often structure a portion of the deal as an earn-out, where part of the sale price is paid out over 1–3 years, contingent on hitting revenue or client retention targets.
To strengthen your position:
- Transition key accounts to team members well before going to market.
- Document key customer touchpoints and engagement history.
- Highlight long-term contracts or recurring revenue models.
- A diversified customer base and decentralized relationship structure will increase buyer confidence—and the purchase price.
4. Why Is Your Business Trending the Way It Is?
Buyers are not just looking at your revenue numbers—they want the story behind the trends.
Is your business growing due to a new strategy, product launch, or market expansion? Or is it shrinking because of competitive threats, supply chain issues, or market decline?
Either way, be prepared with a clear, defensible narrative. Tie trends to tangible actions or market dynamics. Avoid vague answers like “we’re just having a great year” or “the market’s been tough.”
If the business is growing, show how you plan to sustain that growth. If it’s shrinking, highlight the steps you’ve taken to reverse the trend and provide early signs of recovery.
5. How Do You Win Business?
Buyers are trying to assess the sustainability of your sales process. Do customers choose you because of pricing, relationships, geography, or because you truly offer something unique?
Companies that win business on value—whether it’s customer service, proprietary tech, brand strength, or niche expertise—tend to receive stronger valuations. On the other hand, companies that compete primarily on price or personal relationships often get discounted, as those advantages are harder to maintain under new ownership.
Your job as a seller is to highlight what makes your company’s offerings durable and scalable—especially without you at the helm.
6. What Would You Do with Unlimited Resources?
This is a forward-looking question—and a golden opportunity to get a buyer excited.
Buyers want to know what levers they can pull post-acquisition. If you had access to more capital, where would you invest? Would you expand into new markets? Launch a new product? Invest in systems, staff, or marketing?
Don’t assume buyers already have a clear vision. Many are looking for inspiration and guidance from you. Offering well-thought-out growth strategies helps them see the potential—and can justify a higher purchase price.
7. Are Your Financial Projections Realistic?
Sellers often present 12-to-24-month forecasts to buyers, but overly optimistic numbers can raise doubts. Buyers and lenders will ask for interim financials and compare actual performance to projections.
If your current-year numbers are tracking ahead of forecast, that builds credibility and leverage. If they’re underperforming, be ready to explain why—and how you plan to close the gap.
Realistic, defensible projections—especially if an earn-out is part of the deal—are essential to maintaining trust and getting the deal closed on favorable terms.
8. What Are Your Value Expectations?
This is a trap question—and should be handled with care.
If you’re representing yourself and throw out a number too early, you risk one of two outcomes:
- You price too low and leave money on the table.
- You price too high and scare away a qualified buyer.
The better approach is to let the market speak. If you’re working with an M&A advisor, defer to them. A seasoned advisor will tell buyers:
“The market will determine value. We’re running a competitive process and welcome strong offers that align with our client’s goals.”
This not only keeps your options open but positions your company as a premium opportunity, increasing competition and potentially driving up the final price.
Final Thoughts: Preparation Builds Leverage
Every buyer question is a chance to strengthen—or weaken—your position. Being prepared with honest, confident, and strategic responses shows that you’re serious, organized, and ready to transact. It builds trust and helps maximize both valuation and deal certainty.
Whether you’re six months or two years away from a sale, now is the time to start preparing for these conversations. At Touchstone Advisors we can help you anticipate what buyers will ask, craft the right responses, and position your business for a successful and profitable exit. Our goal is to Maximize the Value of our Client’s life’s work.
Steven Pappas, M&A MI
Partner, Managing Director
Touchstone Advisors
860-669-2246
spappas@touchstoneadvisors.com
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