Who’s Actually Buying Businesses Like Yours?

Understanding Searchers, Private Equity, and Strategic Acquirers

When most owners think about selling, they picture “a buyer” as one generic person or group on the other side of the table.

In reality, there are three very different buyer profiles that show up again and again in lower-middle-market and mid-market deals:

1. Individual “searchers” (often SBA-backed)

2. Private equity (PE) funds and independent sponsors

3. Strategic acquirers (competitors, suppliers, or adjacent players)

   
   

Each group looks at your business through a different lens, values different things, and structures deals in different ways.

If you are thinking about an eventual exit, understanding who is most likely to buy your business (as it is today) will heavily influence what it is worth and how a deal would be structured.

Below is a breakdown of each type and what they really care about.

1. Searchers: Individual Buyers Using SBA Loans

Searchers are usually former executives, operators, or professionals who want to buy one good business and run it themselves. They’re often:

• Backed by SBA or bank financing

• Putting in meaningful personal equity

• Planning to step into your role day-to-day

  
  

Typical deal size:

• Generally target businesses under $5M in value

• Sweet spot is often $1M–$3M in enterprise value

  
  

What they are looking for:

• Stable, predictable cash flow: They are buying a job and an investment at the same time. They want businesses with consistent earnings, not big swings.

• Clean, bankable financials: Because they are heavily reliant on bank/SBA financing, your books need to stand up to lender scrutiny. Add-backs and “off-the-books” practices are major red flags.

• A business they can actually run: They need to be able to see themselves stepping into your role. If everything revolves around your personal relationships, technical skill, or charisma, they will worry about their ability to replace you.

  
  

Why searchers can be a good fit:

• They can move decisively when they fall in love with a business.

• They care about culture and continuity, not just financial engineering.

• They are often very engaged operators post-close, which can be appealing if you care about your team and customers.

  
  

Where deals with searchers often get stuck:

• Over-reliance on you (owner dependency).

• Financials that don’t pass lender diligence.

• A mismatch between the complexity of the business and the buyer’s experience.

  
  

2. Private Equity: Financial Buyers Looking for Growth and Scale

Private equity buyers are institutional investors. They raise capital from their own investors (LPs) and put it to work by buying and growing businesses, then selling them again later at a higher value. They may show up as:

• Traditional PE funds

• Independent sponsors (deal-by-deal capital)

• Family offices with a PE-style approach

  
  

Typical deal size:

• Often targeting businesses with $2M+ in EBITDA

• Many are most active in the ~$5M–$50M enterprise value range, with some dipping a bit below or above depending on their strategy

  
  

What they are looking for:

• EBITDA and scalability: They care most about how much profit the business generates and how easily that profit can grow with more capital, better systems, or acquisitions.

• A platform or add-on fit: Some want a “platform” business (the first acquisition in a space). Others are looking for “add-ons” that bolt onto a company they already own—customers, geography, product lines, or capabilities.

• Businesses they can professionalize: They like businesses where adding systems, leadership depth, and better reporting can quickly improve performance and value.

  
  

How they typically structure deals:

• A mix of equity from the fund, senior debt, and seller rollover or note

• It is common for them to ask you to roll 10–30% of your equity into the new entity so you share in the upside when they eventually exit

  
  

Why sellers often like PE deals:

• You can “take chips off the table” now and keep a meaningful stake for a second bite at the apple.

• They bring resources: playbooks, executives, and capital to grow the business.

• They are experienced dealmakers; once they commit, they tend to close.

  
  

Where PE deals often get stuck:

• If your EBITDA isn’t strong or clean enough.

• If growth is too dependent on you personally.

• If the story for scaling (new markets, new products, roll-ups) isn’t clear.

  
  

3. Strategic Acquirers: Competitors, Suppliers, and Adjacent Businesses

Strategic buyers are companies already operating in or around your industry. They see your business as a way to:

• Expand their geography

• Acquire your customers

• Add capabilities or product lines

• Block competitors or consolidate a fragmented market

  
  

These might be:

• Direct competitors

• Suppliers or distributors

• Companies in adjacent niches serving the same customers

  
  

Typical deal size:

• Wide range—from smaller tuck-ins to large acquisitions

• What matters less is your standalone size and more what you represent strategically

  
  

What they are looking for:

• Strategic fit: Where you operate, who your customers are, and how easily your business “plugs into” their existing machine.

• Synergies: Cost savings (overlapping overhead, facilities, systems), cross-selling opportunities, or instant access to markets that would take them years to build organically.

• Speed to impact: They want to know how quickly buying you moves their own strategy forward.

  
  

Why they often pay the highest multiples:

Because of synergies, strategics can justify a higher price than a pure financial buyer. They’re not only buying your cash flow; they’re buying what that cash flow is worth inside their larger organization.

Deals are frequently:

• Heavier on cash at closing

• Structured around integration rather than long-term shared ownership

  
  

Where strategic deals often get stuck:

• Culture mismatch or concern about integration risk.

• Fear of losing key people or customers after the sale.

• Internal politics on the buyer’s side (corporate approvals, shifting priorities).

  
  

So Which Buyer Is Right for Your Business?

There is no universally “best” buyer type. The right pool for you depends on:

• Size and profitability (revenue and EBITDA)

• Industry dynamics (fragmented vs consolidated)

• How reliant the business is on you

• Whether there is a natural strategic fit in your ecosystem

• Your personal goals (full exit vs second bite at the apple vs legacy/culture)

  
  

A few simple examples:

• A $2.5M-value HVAC company with clean books and a strong manager might be a great fit for a searcher or for a strategic competitor looking to expand territory.

• A $10M industrial services company with $2M+ in EBITDA and multiple branch locations may be a prime target for PE as a platform or add-on.

• A niche manufacturing company with proprietary products and strong customer relationships might attract strategics willing to pay a premium to lock in that capability.

  
  

Where an M&A Advisor Fits In

Most owners only sell one business in their life. Buyers—especially PE funds and strategics—buy companies over and over for a living. An experienced M&A advisor levels that playing field by helping you:

• Identify your most likely and best buyer pools: Not just “who might be interested” but who is likely to pay the best price and close on reasonable terms.

• Position your business differently for each buyer type: Searchers, PE, and strategics care about different aspects of the same business. Your materials and story should speak their language.

• Design a process that creates competition: The best outcomes usually come when more than one buyer type is at the table, not when you negotiate in a vacuum.

• Structure a deal that matches your goals: Cash vs rollover equity, seller notes, earn-outs, transition period—all of that varies based on buyer type and your priorities.

  
  

You do not need to decide today whether you want a searcher, PE group, or strategic buyer. But you will almost certainly have a better outcome if you understand which pool your business naturally appeals to now.. and what could expand that pool over the next 1-3 years.

If you are wondering which buyers would be most interested in your business as it stands today.. or what might need to change to attract higher-multiple buyers.. this is exactly the kind of analysis a seasoned advisor can walk you through in a short conversation.