Prospective Buyer Lists for M&A

When selling your business the key question is who will buy my business, who is the prospective buyer and does the advisor have a prospective buyer lists? For large corporations, there are generally few buyers who would make sense to approach and the list is typically short.

For mid-market businesses, particularly niche and specialised, the prospective buyer list should be extensive and even the very best M&A advisory firm is unlikely to have a relationship with all possible prospects. This means that the right advisor will have a well-developed process and appropriate technology for researching, identifying and contacting prospective buyers not to mention a good solid network. The advisor will therefore need to be able to communicate succinctly and effectively with the most senior manager, CEO or owner of the prospective buyer.

Trade & Financial Buyers

Prospective buyer lists are generally made up of various segments including strategic investors (trade buyers), financial investors and intermediaries. The strategic investors are typically looking to gain market share (competitor), regional growth, products, technology and skills and grow critical mass in new or existing markets. Financial investors are looking for an investment vehicle for a return on their investment while intermediaries are those that have clients which are either financial or strategic investors. Intermediaries typically have a large number of clients and would be looking to assist their clients in growing their businesses with a suitable acquisition. Marketing to intermediaries has a significant multiplier effect where they have their own prospective buyer lists These are typically their clients and as such increase the reach in marketing the business and ensuring that suitable prospective buyers are made aware of the opportunity.

Owner’s Prospective Buyer List

A significant resource in developing prospective buyer lists is the current business owner. The owner intimately understands the business, the market, the competitors and the opportunities for vertical integration and who the key players are. Advisors will typically spend significant time with the seller developing extensive prospective buyer lists.