When preparing to sell a business, it’s crucial to understand what attracts buyers. Whether it’s private equity firms or individual investors, all types of buyers look for more than just financial returns when considering an acquisition. They seek a business that aligns with their investment goals and overall preferences. 

Business owners can enhance their company’s appeal as a potential acquisition target by understanding buyer motives. By aligning their businesses with the values that buyers prioritize, sellers can significantly improve their chances of successfully closing a deal with favorable terms and pricing while expediting the overall timeline from valuation to close.  

Below, we examine the key factors buyers consider and how sellers can use this knowledge to prepare for successful exits.  

What Buyers Look for in a Business  

1. Financial Performance and Cash Flow  

Strong financials are the foundation of buyer interest.  

• CPA-reviewed financial statements – Buyers seek reliable financial information when assessing your business. We recommend providing at least two years of reviewed or audited financials. 

• Consistent EBITDA margins and year-over-year revenue growth.  

• Healthy working capital and manageable levels of debt.  

• Recurring revenue or long-term contracts that help predict future earnings. Buyers prefer steady, predictable revenues over one or two large contracts that will eventually end. 

2. Growth Potential  

Buyers are focused on future growth potential; they are not interested in buying a business with flat or declining revenues. Business owners should regularly assess their operational growth and try to adopt these high-growth opportunities:  

• Entry into untapped markets or product categories.  

• Scalable infrastructure that supports expansion.  

3. Synergies and Operational Fit  

For corporate buyers, especially, a business acquisition target must align with their strategic objectives, which may include:  

• Vertical Integration: Acquiring suppliers or distributors to streamline supply chains.  

• Horizontal Integration: Merging with similar companies to increase market share or geographic footprint.  

• Tangible Assets: Access to proprietary technology, experienced staff, or unique capabilities that would be expensive or time-consuming to build in-house.  

4. Industry Positioning and Consolidation Potential  

Many buyers pursue roll-up strategies to create dominant, integrated players. Businesses with a strong market presence or a clearly defined niche are especially attractive.  

Additionally, sectors with high regulatory barriers (e.g., oil and gas, defense) can appeal to buyers seeking to scale and take market control.  

5. Succession Planning  

Many lower-middle market businesses are led by founders approaching retirement. Buyers often see these businesses as opportunities to:  

• Step into a leadership role with a well-functioning operation.  

• Retain the current team and ensure continuity with minimal disruption.  

• Avoid the risks of a leadership vacuum by planning a smooth transition.  

How Sellers Can Prepare  

Understanding what buyers want is only half the equation. Sellers must also take other proactive steps to prepare their business for a successful exit:  

• Audit Your Business: As mentioned above, sellers must have CPA-prepared financials. Additionally, we advise conducting an internal assessment of financials, operations, customer concentration, and growth drivers. This helps uncover any issues that may come up in the due diligence process.  

• De-Risk the Business: Address any other red flags—lawsuits, unstable revenue, lack of documented processes— that could jeopardize buyer interest or reduce valuation.  

• Build a Transition Plan: Show how ownership or leadership can shift seamlessly post-sale.  

• Start Early with an M&A Advisor: Engage an experienced M&A advisor 12–24 months before a planned sale, allowing time to identify value drivers, correct weaknesses, and position the business effectively. Early planning increases your chances of commanding a higher valuation and attracting the right buyers.  

Whether you plan to sell soon or are just starting to explore your options, knowing what buyers want and collaborating with experienced M&A advisors can help prepare your business for the market and position it to appeal to qualified buyers. If you’re interested in beginning the exit planning process, please reach out to us today. 

About ACT Capital Advisors    

ACT Capital Advisors is a premier mergers & acquisitions firm representing lower to middle-market companies across all industries. ACT has a 40-year history of deal-making, closing 250+ transactions, and unlocking over $2.5 billion in wealth for its clients. For more information, visit https://actcapitaladvisors.com/.