How to Use Data to Get More Buyer Interest

Selling your business is, in some ways, like arguing a case in court. You must build enough evidence to persuade the judge – in this case, a buyer – to lean in your favor. Otherwise, your case will be tossed out. Or worse, by wasting buyers’ time, you won’t sell at all, which can hurt your reputation and force you to accept a worse price or terms (both if you’re in a rush to sell).

Where the similarities end is that judging goes both ways. You’re evaluating a buyer as much as they’re evaluating you, and every buyer is different. Do you get along? Can they meet your target asking price? Do they have the funds to close? None of this matters unless you can convince buyers your business is worth acquiring, and when you’re competing with 1,000s of other listings, that can be a challenge.

While you can’t predict exactly what each buyer wants, start by preparing clean, complete, and accurate data. Buyers favor founders who unpack the acquisition opportunity in facts and figures. Not only does this save buyers time, but it also allows them (and you) to prequalify your business for acquisition financing. A nod from a neutral third party like the SBA is another point in your favor. 

Can preparing data be a chore? Yes, but when it comes to such high stakes, you can’t afford to be lax or shy about what you share. Your listing is but a window into your business. Buyers want you to invite them inside, give them the grand tour, and bring to life the opportunity. Bottom line? If buyers are ghosting you or not making offers, reignite their interest by following the steps below. 

Tidy Up Your Accounts

Every founder I’ve worked with has had to tidy up their accounts before they could sell. Thinking you’re immune, or that your books are “good enough”, risks alienating buyers. You only get one chance to make a great first impression. When choosing between two similar startups, buyers will always favor the one whose data is clear, complete, and accurate. 

To build your case for acquisition, prepare at minimum the following: 

  • a 36-month P&L (month-over-month format)
  • balance sheet
  • cohort analysis 

You might be able to pull these documents directly from your payment software, but don’t rely on the data being clean, complete, and accurate. Automation can be an easier way to make mistakes at scale. Instead, convince buyers your business is worth acquiring by eliminating doubt over your numbers. It’s a little more work in the short term, but buyers are likely to see tidy accounts as a microcosm for the rest of your business.

How to Fix Messy Accounts

Enlist the help of your CPA or CFO to tidy up your accounts. For example, as them to help you:

  • reconcile accounting entries to bank accounts and credit cards.
  • fix data entry errors.
  • add missing entries.
  • remove duplicate entries.
  • reclassify any misclassified entries.
  • categorize income and expenses for easy review.

Another bonus to accurate accounts is access to acquisition financing. Third-party lenders like the SBA won’t even consider your business unless your data is clean and accurate. And if you get pre-approved for financing, you can boast that on your listing, which increases your buyer pool.

Emphasize Recurring Revenue

Nothing influences a buyer more than recurring revenue. If your business model is a hybrid of recurring and one-off sales, include both in your TTM revenue, but expect buyers to focus on MRR and ARR. Not just on the size of recurring revenue, but on the quality of it, too.

For example, metrics like customer lifetime value, churn rate, and customer acquisition cost reveal the stability and stickiness of your product. They can also reveal growth opportunities. But to really entice buyers, and lay the groundwork for acquisition financing, prepare customer cohorts.

Prepare Customer Cohorts

Customer cohorts are anonymized transaction data showing your client list and subscription start and end dates. For example, if you acquired 100 customers in January, how many of those 100 customers are still on board and paying for their monthly subscription by December? 

Cohorts illustrate the predictability of revenue and stickiness of your product (how much your ideal customer loves it enough to keep paying). Most people cancel subscriptions when they’re no longer useful. If people churn after a few months, you might not have found product-market fit. If they stay for a year or more, your product is solving a real problem. Cohorts, therefore, give buyers confidence in your revenue.

In April this year (2024), I helped a founder prepare cohorts that qualified them for financing from our third-party partners and drew three offers at the founder’s target price. Before we’d prepared the cohorts, however, all the offers came in below the asking price. Why? Buyers had to include the unknowns of predictability and product stickiness in their financial models. Sales spikes, for example, might be due to seasonality or Black Friday deals and other discounted subscriptions. Cohorts, however, indicate whether the product is doing the heavy lifting – and can help you negotiate a better offer.

WHY COHORTS MATTER: the longer you retain customers, the more attractive your business is to buyers

What does a typical cohort analysis look like? It’s essentially a spreadsheet showing the percentage of customers retained over a given period (see above). At the start, month 1, everything is at 100 percent. That percentage falls over time as customers leave. A small reduction over a long period suggests you’ve found product-market fit. Big reductions, especially over shorter periods, suggest a problem with your offering which could repel buyers. 

Articulate Your Value Propositions

Another reason buyers might not think your business is worth acquiring is that you’ve not explained the opportunity well enough. You can create a listing on Acquire.com in minutes, but have you put yourself in the buyer’s shoes? What would make you want to buy the business?

Your value propositions should be clear and easy to understand. Share your business listing with friends, family, colleagues, and peers. Ask them: do you understand what my business does? Does this business seem valuable to you? Have I clearly explained how to profit from the investment in my business?

The more time and care you take over these questions, the more interest you’ll generate when your listing goes live. And the more interest, the better your chances of getting acquired at your goal price and terms.

Share Growth Strategies

Selling your business is mostly about derisking the acquisition for buyers. If you clearly communicate how a buyer can earn a return, you’ll get much more interest than by leaving it up to the buyer’s imagination. 

You can share growth strategies around SEO, paid ads, or other tactics, but buyers are more interested in what you’ve tried before, what worked, what didn’t, and why you didn’t pursue suggested growth opportunities yourself. Maybe you lacked time, resources, or skills. Whatever the reason, now’s your chance to show buyers why they’d make a great fit. How much capital might a buyer need to pursue these tactics? What skills would they need? Create a potential growth plan and share it with them.

Overcome Your Fear About Sharing

It’s normal to feel a little uncomfortable sharing business data with someone you’ve never met. But don’t let that fear get in the way of your acquisition. Any buyer who wants to view your private details must first sign a mutual NDA, which protects the data you share and gives you legal recourse in the unlikely event something goes wrong. Trust in that protection. 

At the same time, bridge the knowledge gap with buyers in the safest way possible. You don’t need to share your entire codebase or sensitive IP. You can also anonymize most things. If you go into your acquisition feeling defensive and anxious, you’re unlikely to build goodwill with buyers. Share everything relevant, within reason, and if unsure, ask your acquisition expert or M&A advisor for help. 

Prepare and Share Data Purposefully

Most buyers, especially financial buyers, acquire a business, grow it, and then sell it again. Serial and professional acquirers like PE firms do this all the time. Once they’ve sold one business for profit, they’re on the hunt again for something new. As a result, they truly value preparedness in founders.

The uniqueness of your product is certainly valuable, but very few products are truly one of one, so how do you set yourself apart? The answer is in how well you prepare, how efficiently you communicate, and how quickly you respond to buyer requests. By making the buyer’s job easier, you’ll build enough goodwill to attract a better offer. But you don’t want to overwhelm buyers either.

Rather than throw buyers the book on your business, which would probably have them scratching their heads, work with your acquisition manager to present key chapters in the right order. Not every buyer wants to watch a product demo or view your sales deck. Most want to see your financials first and customer KPIs second, and if both look good, they’ll read your CIM and supporting materials. 

Start by sharing quantitative data and move to qualitative data as the buyer’s interest grows. Just like a job interview, you need to wow buyers with your accomplishments before getting on a call. Connect your metrics, upload a P&L, balance sheet, and customer cohorts before you invite buyers to acquisition talks to save wasting time with buyers who’d never make an offer. 

Get Help With the Hard Stuff

You’re not alone when selling your business with us. Your acquisition advisor can take much of the workload off your shoulders, leaving you more time to run your business. But you know your business better than anyone else. The more you prepare, the better you’ll handle buyer inquiries. If you test the market without important information to hand, buyers might favor better-prepared founders.

The good news is that we’re here to help. Your acquisition manager or M&A advisor will provide templates for all the documents you need, walk you through their purposes, and answer questions about every stage of your acquisition. They might even invite your mentor, CPA, or anyone else who leads financial decisions on a call to discuss what you need to prepare or to join buyer-seller meetings. 

Your acquisition manager or M&A advisor will also check your supporting documentation for completeness and to identify any anomalies. For example, when working with founders, I put myself in the buyer’s shoes when reviewing a P&L and might ask why trailing numbers aren’t adding up or why you chose to add back certain expenses in your recast. I look for those things because buyers do (but with a more powerful microscope). If they can verify and validate your metrics, you’ll get into more conversations, and we can refer you to specialists when the need arises. 

Don’t Wait, Communicate

One of the biggest mistakes founders make when selling their business is to…not sell their business. Don’t wait for buyers to ask to see your data. Find out what they need to make an offer. By doing this, you save everyone time. No one wants to get on hours of calls only for the deal to fall through later. The more you help the buyer decide if your business is for them, the faster your startup will get acquired. 

We usually recommend checking in with buyers every couple of days and responding to their questions immediately if possible or at least within 24 hours. As long as you’re not spamming buyers, you can’t over-communicate. Keep pursuing them and overcoming their objections with data until they’re ready to make an offer or decline the opportunity. Then you can move on to your next buyer. 

When convincing buyers your business is worth acquiring, data is your friend. Support your claims with evidence and you’ll outshine those less prepared and suffer less stress in rushing to prepare documents and reports last-minute. And if you’ve taken extra steps to ensure your data is clear, complete, and accurate, you’ll raise yourself high enough above other startups to get acquired at the price and terms you want. 

Want to sell your business for the highest price and best terms? Check out Guided by Acquire, our exclusive M&A advisory for SaaS founders making at least $100k TTM revenue. Apply now

The content on this site is not intended to provide legal, financial, or M&A advice. It is for information purposes only, and any links provided are for your convenience. Please seek the services of an M&A professional before entering into any M&A transaction. It is not Acquire’s intention to solicit or interfere with any established relationship you may have with any M&A professional. 

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