UNDERSTANDING THE SELLER MAY BE MORE IMPORTANT THAN UNDERSTANDING THE BUSINESS
- Aug 6
- 2 min read
Imagine two businesses.
Same industry.
Similar revenue.
Similar EBITDA.
Similar asking price.
Most buyers would conclude they're looking at essentially the same opportunity.
They're not.
Because one variable never appears on the balance sheet.
The seller.
When buyers evaluate an acquisition, they naturally focus on revenue, margins, customer concentration, recurring income, working capital and growth potential. Those factors are essential. They tell you how the business has performed.
They don't tell you what sort of transaction you're about to enter.
Every seller arrives with a different set of motivations.
One may be preparing for retirement after decades of ownership.
Another may simply be exhausted.
A third may be navigating a partnership dispute, while someone else is chasing a new opportunity or managing a family succession.
Interestingly, many of these businesses can look almost identical on paper.
The transaction, however, couldn't be more different.
Those motivations influence everything.
How flexible a seller is during negotiations.
Whether vendor finance becomes an option.
How earn-out structures are viewed.
How cooperative due diligence becomes.
How much support a buyer receives after settlement.
Even the likelihood of completing the transaction at all.
Businesses don't negotiate.
People do.
People decide what information to disclose.
People determine how collaborative the process becomes.
People ultimately decide whether they're handing over a business—or helping someone successfully take it forward.
That's why understanding the seller isn't a soft skill.
It's a commercial advantage.
Every acquisition has two due diligence processes.
One examines the business.
The other examines the circumstances surrounding it.
Sophisticated buyers complete both.
The best transactions are rarely won by the person who analyses the numbers the hardest.
They're won by the person who understands the context the earliest.
Comments