What Do Investors Look For in an Acquisition?

As you seek expansion capital by way of an acquisition, it is important to prioritize the top growth-oriented attributes buyers will be looking for in a potential sale. While each deal is nuanced, savvy investors generally look for a similar set of attributes to vet an opportunity. Prioritize the following factors to stand out from the competition.

Strong Market Position, Stable Cash Flow and Sustainable Overhead Costs

Buyers will seek to fully understand your market position and competitive advantage and will pay close attention to your competition, both for potential new customers as well as for future acquisitions. Buyers will want to ensure they aren’t making an equity investment just to grow the business beyond its current state. Debt statements will be a key source of information, including current capital expenditures and the company’s current and past capital infusions.

In addition to having reliable cash flows, a buyer will want to have a view of operating costs. To this end, they will delve into the productivity of your workforce and available capacity of your equipment or other production methods before further investment is needed. If they sense they need to overhaul the workforce to increase productivity, or that they’ll need to hire a volume of employees before they see growth, that could be a pain point.

Above all, buyers want to avoid investing in a business that appears like an attractive ...