In today’s business acquisition market—which is more dynamic, technical and demanding than ever—there is one question that comes up in almost every conversation with SME owners who are considering a sale: “What is a buyer really looking for when they assess my business?”
Although every process is different and every buyer has their own criteria, there are three elements that consistently feature in all transactions. Three factors which, if properly understood, enable the business owner to anticipate, prepare and increase their company’s valuation before entering into any negotiations.
In this article, we explain what these three key factors are and why they are more decisive today than ever before.
1. Operational independence: the company must be able to function without its founder
One of the first questions any buyer—be it a fund, an industrial investor or a family office—asks is as direct as it is revealing: “What would happen if the founder were to pass away tomorrow?”
Excessive reliance on the owner is one of the factors that most significantly reduces a buyer’s interest and, consequently, the valuation. And it is not just about presence: it is about actual control.
Buyers assess whether:
- Processes are documented
- The team can make decisions without constant supervision
- The sales network, customers or suppliers rely on the founder’s personal relationships
- There are department heads with autonomy
When a company operates solely on the strength of its founder, the perceived risk increases. Conversely, when the organisation demonstrates professionalism, structure and continuity, its valuation improves significantly.
2. Recurring and demonstrable benefits: the quality of revenue matters more than the total figure
One of the biggest changes in M&A processes in recent years has been the growing focus on the quality of earnings, not just their size.
Buyers are no longer satisfied with simply seeing an attractive EBITDA figure: they want to know whether it is genuine, repeatable and sustainable.
That is why they examine aspects such as:
- Reported EBITDA vs. adjusted EBITDA
- Recurring revenue vs. one-off revenue
- Customer concentration
- Seasonality
- Gross margin and its consistency
- Working capital requirements
- Adjustments required to provide a true and fair view of the business
The key is simple: a stable, demonstrable profit is worth more than a high but uncertain profit.
That is why professional accounting practices, monthly reporting and financial transparency have become critical factors in attracting high-quality buyers.
3. Limited risks: the less uncertainty, the greater the value
In any sale or purchase transaction, due diligence has become a turning point.
Today, many deals fall through—or are renegotiated downwards—not because of a lack of business potential, but because of the emergence of risks that could have been addressed earlier.
Buyers pay particular attention to risks:
- Legal: unsigned contracts, litigation, breaches of contract, critical clauses
- Tax: contingencies, incorrectly applied deductions, incomplete documentation
- Employment: irregular pay structures, outdated contracts
- Operational: reliance on suppliers, lack of procedures, absence of KPIs
- Financial: outstanding adjustments, informal record-keeping, lack of monthly closings
Every risk identified creates uncertainty. And in M&A, uncertainty translates directly into:
1. a reduction in the price,
2. deferral of payment through earn-outs, or
3. cancellation of the transaction.
That is why SMEs that prepare for this phase—by organising their documentation, rectifying inconsistencies and professionalising key areas—see a real and measurable increase in their valuation.
Conclusion: Attracting buyers begins long before the process
Buyers are looking for companies that:
- operate without the founder,
- generate sustainable profits,
- and manage risks effectively.
These three key factors determine not only the buyer’s interest, but also the speed of the process, the level of trust during negotiations and, above all, the final price.
Preparing well in advance—months or even years beforehand—is the difference between ‘selling when the opportunity arises’ and selling on the best possible terms.