What Buyers Really Want to Know in Today’s Uncertain Market
Introduction: A Market Reset, Not a Pause
The M&A market has changed in a real way. After the surge in 2021, deal activity has recalibrated into a more disciplined environment shaped by higher interest rates, geopolitical tension, regulatory pressure, and uneven operating performance. Capital is still available, particularly among private equity sponsors, but buyers are far more selective.
Buyers are no longer underwriting optimism; they are underwriting certainty. Today’s diligence focuses on resilience, proof, and clarity. Founder-sellers who understand what buyers want and prepare early are the ones who close on stronger terms with fewer surprises.
The Fundamental Shift: From Speed to Scrutiny
One of the biggest changes is timing. What once took a few months now often takes a year or longer, reflecting market volatility rather than hesitation. Buyers are watching recent performance closely. They want to understand how the business performs today, not just what it did in a different market cycle.
If quarterly results have been inconsistent, margins have shifted unexpectedly, or cash flow does not track with reported profit, the process will slow while buyers request additional information. For founder-sellers, this changes the playbook. If you think you may sell within the next 12 months, the best time to start preparing is now.
Core Financial Due Diligence: Beyond the Basics
Buyers want solid historical financials, clean support, and a credible view of the next 12 to 24 months. Expect requests for monthly financials and a forecast supported by realistic assumptions. A forecast is no longer a hopeful narrative; buyers will test what drives growth, pricing sustainability, and pipeline conversion.
EBITDA quality is heavily scrutinized, and add-backs are not automatically accepted. Buyers want to understand normalized profitability in a realistic operating environment. Working capital has also become a major focus. Strong EBITDA paired with weak cash conversion often triggers deeper diligence into receivables, inventory, and supplier terms to see if needs will increase as the business grows.
The Growth Story: You Have to Prove It
Most founder-sellers have a clear vision for growth, but buyers want evidence. They want documented growth levers that are already working through customer metrics, sales performance, and retention trends.
Scalability also matters. Buyers pay more for businesses that can grow without overhead increasing at the same rate. If growth requires constant reinvestment in people or systems simply to maintain momentum, buyers will adjust valuation and structure accordingly.
Strategic and Operational Diligence: The New Deal Drivers
Operational risk now plays a larger role in valuation. Supply chain resilience has become a key topic, with buyers evaluating sourcing, vendor concentration, and tariff exposure. Technology diligence has also expanded. Buyers view technology as a driver of efficiency and assess whether systems support growth and whether cybersecurity protections are sufficient. Weaknesses here can slow a transaction or reduce valuation due to anticipated remediation. Buyers also seek evidence of pricing power and differentiation that is difficult for competitors to replicate.
The Human Element: Founder Dependence is a Real Risk
Founder-led businesses are attractive, but dependence on the founder remains a key concern. Buyers want depth beyond the founder, evaluating whether leadership can operate the business day to day and whether relationships are institutionalized. If the business cannot function without the founder at the center of decisions, buyers often reduce risk through deal structure or retention requirements. Culture also matters, as buyers consider whether teams can handle change and integrate with new ownership.
Valuation Reality and Deal Structure
Valuations have normalized, although some founder expectations remain tied to the 2021 market. Buyers are now more disciplined and focused on durable cash flow. Because valuation gaps are common, deal structures have become more creative. Earnouts, equity rollovers, and seller financing can help bridge differences and align incentives, provided the terms are clear and measurable.
Preparing for the New Due Diligence: A Founder-Seller Action Plan
The best way to protect value is to prepare before entering the market. Strengthen financial reporting, build a forecast supported by clear assumptions, and review add-backs carefully. Reduce founder dependence by strengthening leadership, documenting processes, and transferring relationships where possible. In today’s environment, diligence is not simply a hurdle to clear; it is the deal. Founders who prepare early move faster, negotiate from strength, and close with far fewer surprises.
Mark Erickson, CPA | Tanner
Managing Partner at Tanner with 30 years of experience in M&A, SEC reporting, and capital events. A former SEC regulator, he advises technology, manufacturing, and banking leaders on transaction readiness. He holds a Master of Accounting from Utah State University and serves on the National Advisory Board for the Jon M. Huntsman School of Business.