If you want to sell your business for the best possible price, you need to think like a buyer. Understanding what buyers evaluate — and what makes them walk away — puts you in a position to prepare effectively and negotiate from strength.
The Five Things Every Buyer Evaluates
1. Quality of Earnings
Buyers will dissect your financials in granular detail. They’re looking for:
- Consistency — steady or growing profit over 3+ years
- Sustainability — earnings that will continue after the sale
- Transparency — clean accounts that reconcile without difficulty
- Normalised EBITDA — adjusted for owner-specific items
Red flags: erratic revenue, unexplained margin changes, informal cash transactions, complex related-party arrangements.
2. Customer Concentration and Quality
The question every buyer asks: what happens to the revenue after I buy this business?
- Diversification — no single customer representing more than 10-15% of revenue
- Contracted revenue — long-term agreements, recurring services, subscription models
- Customer relationships — held by the business (not the owner personally)
- Customer quality — creditworthy, growing, in stable industries
If your top 3 customers represent 50%+ of revenue, expect significant multiple compression or earnout provisions.
3. Owner Dependency
This is the most common deal-breaker for small and mid-market businesses. Buyers ask:
- Can this business operate for 3 months without the owner?
- Are key customer relationships with the business or the owner?
- Is the owner the primary salesperson, technician, or service provider?
- Is there a management team that can run operations?
High owner dependency doesn’t make a business unsellable, but it significantly reduces the price and often means the buyer will structure a longer earnout or transition period.
4. Growth Potential
Buyers aren’t just buying today’s cash flow — they’re buying the opportunity to grow. They look for:
- Untapped markets — geographic expansion, new customer segments
- Cross-sell opportunities — new products or services to existing customers
- Operational improvements — margin expansion through better systems or scale
- Acquisition synergies — cost savings or revenue uplift from combining with the buyer’s existing business
A business with a clear, credible growth story justifies a higher multiple.
5. Risk Profile
Everything that could go wrong after settlement:
- Legal exposure — outstanding disputes, warranty claims, regulatory issues
- Lease risk — short remaining term, upcoming rent reviews
- Key person risk — critical employees without retention arrangements
- Technology risk — outdated systems, technical debt, cybersecurity gaps
- Compliance risk — licencing, accreditation, environmental, WHS
- Market risk — industry disruption, regulatory change, competitive threats
What Makes Buyers Walk Away
In our experience, the deal-killers are:
- Financial surprises during due diligence — numbers that don’t match what was presented
- Undisclosed liabilities — legal, tax, or compliance issues that emerge late
- Owner can’t step back — business is too dependent on the seller
- Lease problems — short remaining term or unfavourable conditions
- Key staff flight risk — critical employees with no retention arrangements
How to Position Your Business
The best time to start thinking like a buyer is 12-24 months before you plan to sell. Address the issues above proactively, and you’ll sell faster, at a higher price, with better terms.
Read our 12-month preparation checklist or get in touch to discuss your situation confidentially.