The qualification is different for an individual or a company.
For companies, it is a question of seeing the strategic interest first.
- In terms of size, a target may be too small for an acquirer, this is normally the case when it represents less than 5-10% of the buyer, a logical and easy acquisition varies between 10% and 50% of the acquirer. The deal become more difficult when the target is bigger than the buyer. The challenge can be at the level of financing and at the level of managerial skills.
- At the strategic level, it is a question of understanding the geography, the service / product offer, the infrastructure (equipment, real estate, teams, and human resources) of the seller and seeing what the buyer needs. The more we have in common, the more the chances of having a transaction increase.
- The financial means of the buyer should not be neglected. It happened that the buyer had less means than our sellers. In these cases, it is the outgoing shareholders who find themselves potentially having to increase their Balance of sale and they become the banker of the deal.
In short, when buyers are evaluating opportunities, they dress up, show up on their best day to get the maximum chance of further discussions. You have to be careful with varnish and make-up that can hide realities.
Individuals must first identify their down payment – often an imbalance between want and power exists. Then, it is at the level of skills that the targets can be best aligned – the skill set must correspond for there to be added value. It should be noted that often an individual buyer will be outclassed by a strategic buyer at the level of the purchase offer, whether for the price or the terms and conditions.