Essential Questions to Ask Potential Buyers During the M&A Process

When navigating the M&A process, it is crucial for sellers to thoroughly assess potential buyers early on to ensure a good fit. After buyers review your Confidential Information Memorandum, they will naturally ask for a call with you to learn more. Here is a list of essential questions to ask every prospective acquirer:

Why does your company/organization want to buy my company?

This question is a useful starting point for understanding the buyer's strategy. Knowing their intentions for your company is essential, especially if you consider staying on board post-acquisition. Buyers can give several answers here, including spitball, but this question will help them learn more about the overall strategy. They might even bring up other deals in the past and the angle they used there. 

Why are you interested in investing in my industry (If there is no industry experience)? 

This question is critical for assessing the buyer’s motivation, particularly if they are new to the industry. A serious buyer will thoroughly explain their interest, reflecting a genuine commitment. Their enthusiasm and detailed responses can indicate how serious they are about acquiring your company.

Where do you see this industry going over the next five to ten years?

The question is designed to identify your company's long-term vision. Buyers will share their goals with the acquisition. A serious buyer should articulate a clear, strategic, long-term plan, including anticipated growth and business goals. Understanding the potential buyer’s vision and being aligned is essential for a successful sale.

What is your time frame for acquiring a company?

This question will again help determine whether the buyer is seriously considering completing the acquisition. Eager buyers will provide a detailed timeline, including when you can expect a letter of intent and due diligence duration. This will be helpful to know as some buyers can ask for a longer time than others for different reasons. Keep in mind that anything can happen in due diligence, but it is always good to have an idea of what is to be expected once you reach this stage. 

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Has your organization made any acquisitions recently?

It is important to uncover whether they have acquired companies before. This is essential to learn how comfortable the buyer is with the process. An experienced buyer usually makes for a smoother process and gives you, as a seller, confidence to move forward over someone who has not completed an acquisition. A follow-up question to an experienced buyer should be the following:

Can you share details about the integration of those acquisitions?

The integration process for the previous acquisitions can be seen as the buyer’s strategy and practices. Here, you can start to understand the vision for your company as they might share if they have relocated employees, closed offices, and roles higher management have taken post close, etc. This will be critical for evaluating a good fit for your customers and employees. 

How long have you been considering acquiring a company like mine?

Asking this question will help you gauge how serious the buyer is in completing a transaction. A buyer that shares a short time can be inferred not to be a serious buyer since they might not have completed the research in space. A serious buyer might take a while to look for a company, as market research can include comparing location, markets served, size, and other factors. When a buyer does homework on the company they want to acquire, it will translate into a successful transaction.  

How many other deals do you have underway now?

The question will help you understand what the buyer’s bandwidth is. They might be evaluating and researching themselves to identify the best fit by looking at several other opportunities in the same space. A buyer’s strategy might include looking at several opportunities at once, and your company’s acquisition will only take place for them if another deal takes place first. This is not necessarily a bad thing, but it will be good to know when determining what next steps you wish to take with the buyer.

These are great questions to ask every buyer you meet to help assess whether they are a good fit for you. Do consider asking the questions in a natural conversational way, as the talks should have a flow to avoid any silence or awkward moments. Questions should be asked politely and with tact. The goal here is to help gain a clear understanding of who your buyer will be and assist with what next steps you will take with potential buyers you hold conversations with. 

If you have any questions or need guidance before meeting a potential acquirer, do not hesitate to contact your Benchmark International team for support.  

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