The Things Business Buyers Notice Before Making an Offer
By Robert Frary · robertfrary.com
Most business owners spend years building something, and months trying to sell it. The buyer across the table from them, if serious, has spent that same period evaluating dozens and likely hundreds of other businesses for sale. They've developed their own internal pattern recognition algorithm for filtering deals. They know what they're looking for, and more importantly what they’re not looking for, before they know anything about your specific business.
I was that buyer. I spent nearly one year actively searching for a business to buy before closing on my first deal. I evaluated hundreds of listings, had real buying conversations with several of them, and got deep into due diligence on a handful. By the end, I could tell within a few minutes of reading a listing whether it was worth investing more of my time to learn more about the deal or if I should walk. Most of the time, the right move was to walk away - knowing when to walk, whether early on or deep in due diligence, is an art in and of itself.
What I noticed in those first few minutes is what I'm writing about here. Not because it's theoretical, but because I went through it myself and understand what it’s like. If you're thinking about selling at any point in the next year or five years from now, this is what a buyer is actually seeing when your listing crosses their desk.
The first number they look at
SDE (seller’s discretionary earnings) or EBITDA (earnings before interest, taxes, depreciation and amortization) if big enough. Both SDE and EBITDA are fancy ways of saying profit - how much money the business profits after everything is said and done. That's the first thing being looked at by a potential buyer. Always.
Before anything else, a buyer is running a quick mental calculation: does the SDE on this listing make sense given the asking price (they’re looking at your ‘multiple’ to see if it’s industry standard or if you’re delusional), and is there enough in this deal to pay myself, service the debt needed to buy this business, and still have a business worth running? If the answer is no, nothing else matters - they're already moving to the next listing.
SDE is the foundation. If your SDE figure is wrong - overstated, poorly calculated, or unexplained - a serious buyer will catch it. Not eventually, but quickly. They've seen enough listings to know what realistic SDE looks like for a business of your size and type. When the number doesn't match the story, the story is over - their spidey senses are tingling and they’ve moved on.
This is why it’s critical to spend a good amount of time on this figure, specifically. Not just what it is, but how to present it clearly, what's included, and an explanation of why every single add-back is defensible. An SDE figure without clear supporting context is an invitation for doubt, and doubt makes a qualified buyer walk away without you getting the reason they’re walking away - they just walk.
The red flags they scan for immediately
Before a buyer develops any real interest and gets their hopes up, they're running through a mental checklist of things that will break the deal. These aren't obscure concerns, they're the same few things that show up repeatedly across not-ideal deals. Serious buyers have seen enough of them to spot them quickly - remember, they’ve developed and refined their own mental pattern recognition algorithm to help them sift through the noise.
Customer concentration. One customer representing 30%, 40%, 50% of revenue is not a business - it's a dependency. A buyer purchasing that business isn't buying a sustainable business; they're renting someone else's relationship that may or may not continue on after that person leaves. If that large customer leaves after the sale, for any reason, the business would not survive without a significant pivot and some very good luck. Most buyers know this and will either walk away, or price the known risk in ways the seller won't like.
Owner dependency so deep the business doesn't function without them. There's a version of this that's fixable and a version that isn't. Fixable: the owner handles a handful of relationships or functions that can be systematized or transitioned with a plan and adequate time. Not fixable: the owner IS the product or the relationship, and there's no real business underneath them. Buyers can usually tell the difference within the first conversation.
The "untapped potential" pitch. This one I want to address directly, because I saw it constantly and it always made me more skeptical, not less. A listing that leads with "significant untapped marketing and sales potential" is telling me one of two things: either the seller couldn't execute on the obvious opportunity sitting in front of them, which is itself a data point about management; or the opportunity doesn't really exist and this is filler language to justify an asking price that the real numbers don't support. It’s like someone on your management team saying we just need to break into the FAANG (Facebook, Apple, Amazon, Netflix, Google) accounts to hit our revenue goals. Yeah…let me just go to the FAANG orchard and pluck off some of that easily obtainable fruit from the FAANG tree - if only it were that simple! Either way, neither scenario is a good sign. Sellers sometimes think pitching ‘potential’ is attractive to buyers - the wishful thinking of untapped revenue that they themselves decided they didn’t want. In my experience, the opposite is true - it raises more questions than it answers - and was a big turn-off for me.
AI disruption exposure. This wasn't something buyers talked about much when I was searching a few years ago but, because of my past career in the Machine Learning and AI realm, it was a very real part of how I looked at any business. Not from panic, but from pragmatism. Some businesses are well-insulated from what's happening in AI, at least for a bit - skilled trades, businesses built on physical presence or specialized relationships, industries where the complexity lives in the real world rather than in information processing. Others are not. If I'm considering a business that looks vulnerable to meaningful disruption in the next three to five years (for them or their clientele), that changes the calculus on what I'm willing to pay and how I'm thinking about the investment timeline. Buyers who are doing serious evaluation are thinking about this, even if they're not saying it directly.
The gut check that happens before the logic does
Here's something that doesn't get talked about enough in conversations about buying and selling businesses: before a buyer runs a single number, before they get on a call, before they ask a single diligence question - they're asking themselves whether they can see themselves in this business.
It's not a romantic question. It's a practical one. Can I wake up and do this every day? Does this business match who I am, what I value, and how I want to spend my time? Is this something I’ll be able to comfortably talk about with friends? With family at holidays? Is there something about this industry or this customer base or this type of work that I find genuinely interesting?
I walked away from businesses with strong financials because I couldn't quite get there on this particular question. The numbers worked, but the business didn't work for me. That's a legitimate reason not to buy something, and most buyers trust it.
This matters for sellers because it means you can't fully control whether a buyer connects with your business. What you can control is whether the listing gives them a clear enough picture to make that call. Listings that are vague about what the business actually does, what the day-to-day looks like, or what kind of operator would thrive there make it harder for buyers to self-qualify. The right buyer may scroll past because they couldn't tell whether or not it was for them.
What made me more interested - not less
Most advice about selling a business focuses on what not to do. I want to be specific about what actually moved me toward a deal, because there were things sellers did that made me genuinely more engaged.
A listing with no obvious red flags. This sounds like a low bar, but it’s not. A remarkable number of listings have something in the first read that raises a flag. A listing that doesn't - one that tells a clean, coherent story with numbers that make sense - stands out because it's not common. The absence of problems is itself a signal.
A detailed, honest explanation of why they're selling. This was a big one for me. When a seller explained in great detail why they were selling - not "pursuing other opportunities" or "ready for retirement" but an actual account of where they are in their life and why this particular moment made sense for them - I treated it as a positive signal. I came to think of it as a white flag in the best sense: an act of openness that said this person is willing to be real with me. It didn't make me trust them blindly. It made me willing to lean in and find out more.
The sellers who gave me that kind of honesty upfront were, in my experience, the ones who were also honest throughout the process. It set a tone. The sellers who gave me a vague or PR-polished reason for selling were often the same ones where I'd discover something later on that they should have told me much earlier.
When a seller explained, in real specificity, why they were selling - I treated it as a positive signal. It set a tone that carried through the whole process.
A business that matched what was described. The first conversation with a seller or their broker is where a lot of deals are won or lost. If what I learned in that conversation matched what was in the listing - if the story was consistent - I trusted the listing more. If the conversation revealed things that should have been in the listing, I started wondering what else wasn't there, and 9.99 out of 10 times I walked.
What this means if you're thinking about selling
The buyers who can afford your business and are capable of running it are also the most sophisticated ones. They've been in enough deals to have a good instinct for what's real and what's spin. Trying to manage their perception rather than give them an accurate picture almost always backfires.
The cleanest path to the best deal is also the most straightforward one: know your real numbers, present them clearly, explain your business honestly, and tell the truth about why you're selling. That combination doesn't just survive diligence, it attracts the kind of buyer who will close.
The buyers who are impressed by a polished pitch and don't ask hard questions are also the buyers most likely to blow up the deal when they find something in diligence - because they always find something. The buyers who ask the hard questions up front, who want to understand the real picture, who push on the things that don't immediately make sense - those are the buyers you want. Make it easy for them to find what they're looking for, and it will serve you in the long run.
If you're thinking about selling your business: I offer a straightforward first conversation where we look at your business through the lens of what a buyer would actually see. No pitch, no pressure. If you want an honest read on where you stand, I'm happy to talk.