What buyers really look at first
Introduction
You are ready to sell. Your listing is online. The first buyers are reviewing your file. But what do they really look at first?
The answer may surprise you. It is not always the turnover, nor even the sector of activity. Experienced buyers follow a precise logic: eliminate risks before evaluating potential. They first look for what could go wrong, then what justifies the asking price.
This approach creates a gap between sellers and buyers. You highlight growth and opportunities. They scrutinise stability, clarity of documents and warning signs. Understanding this difference in perspective changes everything in preparing your file.
This guide deciphers the SME buyer criteria applied from the first minutes of analysis. You will discover the three elements consulted as a priority, the documents that reassure, the red flags that scare people away, and how buyers actually evaluate your price. Concrete information to align your expectations and maximise your chances of closing.
📌 Summary (TL;DR)
SME buyers follow a logic of risk elimination before evaluating potential. They scrutinise three criteria as a priority: financial stability, documentary clarity and dependence on the seller. Accounting documents from the last three years and the client structure are consulted immediately. Red flags such as inconsistent figures or excessive dependence immediately scare people away. The price is evaluated by comparison with sector multiples and repayment capacity.
📚 Table of contents
The 3 criteria that come before everything else
Buyers always start with three decisive criteria before going any further.
Current profitability comes first. The figures from the last 12 to 24 months count more than projections. A buyer examines net margins, available cash flow and revenue trends. An SME that generates 150,000 CHF of stable EBITDA is worth more than a company at 200,000 CHF in decline.
Dependence on the owner is the second critical point. The buyer wonders: can the business run without the seller? If all major clients only deal with the owner, or if no processes are documented, the risk is too high.
Clarity of figures completes this trio. Clean accounting, traceable invoices and consistent tax returns immediately reassure. Opacity scares people away. To deepen your analysis, consult our rapid evaluation grid.
What reassures: stability before growth
Buyers first look for stability, not growth. A predictable business is worth more than uncertain potential.
Recurring clients are a major asset. A retention rate of 80% over three years signals a solid base. Conversely, a portfolio that changes every year is worrying.
The team in place matters enormously. Employees with an average of 5 years' seniority indicate a stable culture. High turnover suggests internal problems.
Existing contracts and documented processes facilitate the transition. An operational manual, written procedures and long-term client contracts reduce risk. Growth becomes a bonus when these foundations are solid.
A buyer prefers to buy a stable business that they can develop rather than a rocket without autopilot.
Documents consulted as a priority
Every serious buyer requests the same documents from the first contact. Having these elements ready speeds up the process.
Annual accounts for the last 3 years: to analyse the financial trend and calculate a realistic valuation.
List of main clients (anonymised at the beginning): to assess the concentration and quality of the portfolio.
Organisation chart: to understand the structure and identify key positions.
Important contracts: commercial leases, supplier agreements, major client contracts. They reveal commitments and dependencies.
Tax and social situation: up-to-date certificates confirming that there are no hidden liabilities.
These documents allow a rapid initial evaluation. To properly prepare for this stage, read our guide on the first meeting with a buyer and consult the 50 essential questions.
Red flags: what immediately scares people away
Certain warning signs stop a negotiation dead. Experienced buyers spot them quickly.
Vague or incomplete accounting: gaps in supporting documents, unexplained discrepancies or accounts mixed with personal finances.
Single dominant client: a single client representing more than 40% of turnover creates a critical dependency risk.
Ongoing disputes: lawsuits with clients, suppliers or employees signal management or relationship problems.
High turnover: constant staff rotation often reveals a poor atmosphere or failing management.
Indispensable owner: if the seller is the sole salesperson, the only qualified technician or the exclusive contact for clients, the transition becomes very risky.
For a complete analysis, consult our article on the 15 red flags before buying.
How buyers evaluate the asking price
A buyer always calculates their own valuation before negotiating. They never rely solely on the advertised price.
The most common method uses EBITDA multiples: the buyer multiplies earnings before interest, tax and depreciation by a sector coefficient (often between 3 and 6 for Swiss SMEs). They then compare with tangible assets and comparable transactions in the sector.
A gap between the seller's expectation and the buyer's calculation is normal. But if the difference exceeds 30%, negotiation becomes difficult.
The buyer also adjusts according to identified risks: client dependence, condition of equipment, quality of the team. A well-documented and stable business justifies a higher multiple.
To explore these methods further, read our guide on valuation for buyers or use our online evaluation tool.
SME buyers follow a precise and methodical evaluation logic. They first examine financial stability, client quality and clarity of documents. Before even discussing growth or potential, they look for evidence of solidity: consistent balance sheets, recurring revenues, team in place.
Red flags, opaque accounting, excessive client dependence, ongoing disputes, eliminate a file in a few minutes. Conversely, complete and transparent documentation speeds up the process and strengthens trust.
For sellers, understanding these criteria allows you to prepare a convincing file. For buyers, this analysis grid structures the evaluation and avoids costly mistakes.
Are you selling your business? Ensure that your file meets buyers' expectations by estimating its value for free. Are you looking to acquire? Explore the opportunities available on Leez and apply these criteria from your first analysis.
