A client hired us to get a deal done with a buyer of his business. A buyer who made an above market offer and has accepted an even higher counteroffer. Our client’s business is very successful, probably in the top 25 by volume in his industry in the US. FYI, the industry is extremely fragmented with a ton of very small firms.

As we talked, I asked how many other companies have the wherewithal to buy his firm? Not many it turns out. I called an industry expert friend; our client called an industry attorney and a trade association. All answers were, it’s maybe a couple handfuls of potential buyers and we don’t know if any of them have an interest in making an acquisition.

For many the first reaction would be to take the business to market. Build buyer competition. And that’s why market research is so important. In this case, there’s a very limited market so when you have a great offer, take it (the owner is ready to start exiting and will stay on for a few years).

Knowing who you can sell to is so important. It can save a lot of work and angst and yield great results.