Market Note 01
What makes a business attractive to an acquirer?
Two businesses with similar revenue can attract very different buyer interest. How acquirers judge the quality, durability and potential of earnings.
Revenue is where a buyer starts, not where a buyer decides. Two businesses with the same turnover can attract very different interest depending on the quality of their earnings, how durable those earnings are, and what a buyer believes they can become.
Quality of earnings
Buyers look past the headline number to what sits underneath it. Recurring and contracted revenue is valued more highly than one-off project work. Clean margins, with adjustments that are few and easy to explain, are trusted more than a heavily normalised figure.
Durability
A buyer is paying for the next five years, not the last three. A broad customer base, low churn, long-standing supplier terms and a business that does not depend on its owner all tell a buyer the earnings will still be there after completion.
Potential
The strongest interest comes when a buyer can see what the business becomes in their hands: a new market, a product they can sell through their own channels, costs they can share. Owners who can show that path clearly invite buyers to price it in.
Preparing for all three takes time, which is why the work is best started well before a process begins.
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