Quick answer: Buyers find acquisition targets in five ways: businesses listed by brokers, processes run by M&A advisors, direct outreach to owners who have not listed, industry contacts, and referrals from CPAs and attorneys. Listed businesses arrive with materials but draw competing bidders. Direct outreach and referrals usually take longer and can lead to a negotiation with only one buyer. Active buyers often combine channels and track every conversation in one pipeline.
Key points
- The channel decides how much competition a buyer faces. Listings and advisor-led processes put several buyers on one timetable, while direct outreach and referrals can produce a conversation with a single buyer.
- Listings of smaller businesses often quote seller’s discretionary earnings and larger processes quote adjusted EBITDA, so a buyer restates every target on one measure before comparing them.
- Direct outreach is a volume exercise run with respect: a researched first message, one clear request, steady follow-up and a courteous close when the answer is no.
- A pipeline that records the source channel and the reason for every pass shows which channels produce conversations and which criteria need to change.
Where acquisition targets come from, channel by channel
A target reaches a buyer through one of five channels, and the channel shapes the first conversation more than the business does. A listed business comes with a seller who has decided to sell, an intermediary who controls the timetable and other buyers reading the same file. An unlisted business comes with none of that, which means less competition and less information. The table compares the channels from the buyer’s side, and the buyer’s roadmap shows where sourcing sits in the whole acquisition.
| Channel | What the buyer receives | Competition | Main cost to the buyer |
|---|---|---|---|
| Broker listings | A summary, then financials under a confidentiality agreement | Many buyers on the same listing | Screening time and price pressure from bidding |
| Advisor-led processes | An information memorandum, a process letter and bid dates | Invited buyers on one timetable | A full bid effort, with a price backed by terms |
| Direct outreach | A first conversation with an owner who may not be ready | Often none at the start | The volume of contacts and sustained follow-up |
| Industry contacts | An introduction from a supplier, customer or peer | Usually limited | Relationship capital with the introducer |
| Professional referrals | An introduction from a CPA, attorney or lender | Usually limited | A reputation for discretion |
Many active buyers use more than one channel, because each fails in its own way. Listings are crowded, outreach is slow and referrals arrive on someone else’s schedule.
Listings and advisor-led processes: buying on the seller’s timetable
Broker listings and advisor-led processes are one channel at two scales. In both, a sell-side intermediary decides what the buyer sees, when it sees it and how many other buyers are in the room. The comparison of M&A advisors and business brokers explains why the scale differs. A broker circulates a summary and, after a confidentiality agreement, a financial package. An advisor-led process adds an information memorandum, a process letter with bid dates and, for finalists, a management meeting.
- Responsiveness is the first screen. Intermediaries sort buyers by how quickly and clearly they respond. A buyer that returns the confidentiality agreement promptly, states its criteria in a few sentences and explains how it will pay gets a second call.
- The earnings measure differs. Listings of smaller businesses often quote seller’s discretionary earnings, which add back one owner’s pay, while larger processes quote adjusted EBITDA. A buyer restates both on one basis, and the SDE versus EBITDA comparison explains why they cannot be mixed.
- The numbers are the seller’s version. A buyer treats the financial package, add-backs included, as a claim to test, as the guide to quality of earnings describes.
- Terms can beat price. The seller’s advisor compares bids on more than the headline number, so a buyer with certain financing and few conditions can win at a lower price. The guide to first-round offers shows how the seller’s side weighs them.
On a first call, a buyer learns the most by asking why the owner is selling, what role the owner expects afterward and what an outside accountant has reviewed.
Direct outreach to owners who have not listed
Direct outreach means that a buyer, or an advisor acting for it, contacts the owner of a company that is not for sale and asks for a conversation. It trades effort for access. Many contacts go nowhere, but a conversation that does begin often has no other buyer in it. An advisor can make the contact without naming the buyer until the owner shows interest. Searchers and platform builders often source this way, as the guides to search funds and add-on acquisitions explain.
- Build the list from written criteria. Niche, size, geography and business model come from the strategy stage of the buy-side process. Trade association member lists, event exhibitor lists and introductions supply the names.
- Research the owner first. Note how long the owner has run the company and whether a successor appears to be in place. The first contact goes to the owner personally, never through employees.
- Write a first message that is easy to decline. Say who the buyer is, why this company interests it and what is being asked, which is a short, confidential conversation. Leave out any view of value.
- Follow up on a fixed schedule, then stop. A short, defined sequence with a clear final message ends the contact without pressure.
- Use the first conversation to listen. Ask what the owner wants from the next stage: price, a legacy for the brand, a role after closing, certainty for employees. A confidentiality agreement comes before any financial information.
Respect is practical, because owners and their advisors in one industry talk to each other. That means keeping the approach private, accepting a no without argument, and never misstating who funds the buyer or implying that other owners have agreed to sell.
Illustrative example: How many letters one acquisition can take
A buyer sends a letter to every owner on a qualified list. The response rates are placeholders, not rates anyone should expect.
| Step | Owners | Share of the step before |
|---|---|---|
| Letters sent | 400 | not applicable |
| Replies | 60 | 15 percent |
| First conversations | 24 | 40 percent |
| Financials shared under confidentiality | 12 | half |
| Targets that fit price and criteria | 4 | one third |
| Letters of intent signed | 2 | half |
| Closings | 1 | half |
At these rates, 400 letters produce one closing. If half as many owners reply, the same search needs 800 letters or a much longer calendar. The numbers are invented to show the mechanics and are not benchmarks.
Referrals from industry contacts, CPAs and attorneys
Advisors and industry contacts often hear about an owner’s plans early. A CPA sees the financial statements, an attorney sees partner disputes and succession questions, and a lender sees loan maturities. Suppliers and customers notice an owner who has no one to hand the company to. A referral arrives with trust attached, and the owner has often asked for the introduction.
Referral sources owe a duty to their clients, so they introduce buyers they can describe in a sentence and trust with a confidence. A one-page profile helps: the kind of company sought, its size in terms of earnings, the geography, how the buyer would run the business and how it treats employees. The guide to how CPAs support clients through a sale shows the same relationship from the other side, and the guide to buying a business in Charlotte, NC covers regional points.
A customer, supplier or competitor that offers an introduction has an interest in the outcome, perhaps continuity of supply or a wish to buy the company itself. A buyer asks what the introducer expects next and keeps the owner’s information from the introducer unless the owner agrees.
What each channel does to price, structure and information
- Price. In listings and processes, competition sets the price. In a one-on-one conversation the price comes from negotiation, and an owner without a reference point may ask for too much or too little, so privacy does not ensure a lower price. The guide to valuing a target covers how a buyer forms its own number first.
- Structure. A conversation with one owner leaves room to design the payment, such as a seller note, rollover equity or an earnout, which the guide to rollover equity and seller notes explains. A competitive process shapes structure by what rival bidders offer.
- Information. A listing brings a packaged story to test. An unlisted company brings none, so the buyer builds its picture from conversations and diligence, and often commissions financial work earlier.
- Time and cost. A buy-side advisor can run outreach, which exchanges a fee for capacity. The comparison of sell-side and buy-side advisory describes that role.
A buyer with committed capital and little time tends toward listings and processes. A buyer with a narrow thesis and patience tends toward outreach and referrals.
Tracking a pipeline from first list to letter of intent
A pipeline is one record of every target, the channel it came from and the next step. Without it, an owner receives two letters, follow-ups slip and the buyer cannot tell which channel produces conversations.
| Stage | Meaning | What to record |
|---|---|---|
| Identified | Fits the criteria on paper | Source channel, owner, basic facts |
| Contacted | First message sent | Method, sender, follow-up date |
| In conversation | The owner has spoken with the buyer | What the owner wants, timing, any price view |
| Under confidentiality | Agreement signed | Who may see the information |
| Screened | Financials reviewed | Estimated normalized earnings, price range, open questions |
| Letter of intent | Proposal made or received | Terms and exclusivity dates |
| Passed or parked | The buyer or the owner declined | The reason, and when to look again |
The passed column teaches more than the closed one. If many passes cite the same reason, such as customer concentration, owner dependence or a business that is too small, the criteria need sharpening. The source column shows which channel produces targets that reach screening. Because the pipeline holds information shared in confidence, access stays with the people who need it.
A target that survives screening moves toward a written proposal, covered in the guide to writing a letter of intent as a buyer, and toward the review in the guide to building a buyer’s diligence plan.
Frequently asked questions
Where can I find businesses for sale?
Businesses for sale appear through brokers and their online listings, through M&A advisors who run confidential processes for larger companies, and through referrals from CPAs, attorneys and lenders who know owners considering a sale. Many owners never list at all, so buyers also contact them directly. Each route carries different competition and a different quality of information.
How do I find off-market businesses to buy?
Off-market sourcing means reaching owners who have not listed. Buyers build a list from written criteria, research each owner and make a short personal first contact that is easy to decline. They follow up a limited number of times, sign a confidentiality agreement before any financial information changes hands, and record every reply.
Is it better to buy through a broker or approach owners directly?
Neither is better in every case. Broker listings bring ready materials and competing buyers, so speed matters and bidding sets the price. Direct approaches take more effort and many go nowhere, but they can open a negotiation with a single buyer and more freedom over structure. Buyers with the time often use both.
How do I approach a business owner about buying their company?
Open with a short, personal message that says who the buyer is, why this company interests it and what is being asked, which is a confidential conversation. Say nothing about value, avoid suggesting any knowledge of the finances and do not contact employees or customers. Make it easy for the owner to decline, and accept the answer.
How many businesses does a buyer need to contact to complete one acquisition?
There is no reliable standard. The number depends on how narrow the criteria are, how the first message is received and how many owners are willing to share financials. Buyers commonly find it takes more contacts than they expected, so the practical answer is to track each stage of the pipeline and learn from their own results.
Thinking about a sale or an acquisition?
The Impetus Group provides sell-side and buy-side M&A advisory, from preparation and buyer outreach to negotiation and closing. A transactional valuation is often the first step, scoped and priced separately.
Related guides
- How a Buy-Side Acquisition Process Works: From Strategy to Integration: The stages of acquiring a company: criteria and sourcing, outreach, valuation, the letter of intent, diligence, financing, the purchase agreement and integration.
- M&A Advisor vs. Business Broker: Which Fits Your Business?: M&A advisors and business brokers both help sell companies, but they usually serve different sizes of business and buyers. Compare the two and see which fits.
- Sell-Side vs. Buy-Side M&A Advisory: What Each Does: Sell-side advisors represent the owner selling a company. Buy-side advisors represent the acquirer. See what each does, how they differ and when you need one.
- Valuing an Acquisition Target: How a Buyer Decides What to Pay: How a buyer values an acquisition target: restate earnings, price the risks, test the return and funding limits, then set a walk-away price. With a worked example.
- Financing a Business Acquisition: Equity, Bank Debt, Seller Notes and SBA Loans: How buyers fund an acquisition: equity, senior debt, SBA-guaranteed loans, seller notes, mezzanine and rollover equity, with a sources and uses example.
- SBA 7(a) Loans for Buying a Business: What to Know Before You Apply: SBA 7(a) loans can finance a change of ownership. See the loan cap, guarantee levels, rate and maturity rules, the SOP 50 10 8.1 date and what sellers should expect.
This guide is general education. It is not a valuation opinion, appraisal, investment advice, or legal or tax advice. How these guides are made.