Why That "Interested Buyer" Probably Isn't

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I had coffee with James last month. He built an incredible manufacturing business over 22 years:

• $35M in revenue
• Solid margins
• The kind of company any entrepreneur would be proud of

But he was ready for the next chapter. His kids weren't interested in running the business and none of his employees had the wherewithal to buy the company.

When I met with him he had just finished the sale to a private equity firm. I thought we were meeting to celebrate the closing, but James looked exhausted, not excited.

"I thought I did well," he told me. "Got 4.2x EBITDA. But my competitor sold three months earlier for 6.5x. Same size, same margins. He schooled the buyer. I keep wondering what I missed."

James's story has been weighing on me because it's not unique. I've watched too many founders get outmaneuvered in what should be their victory lap.

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The Calls Aren't What They Seem

When you run a profitable business, the calls start coming:

• "Strategic buyers interested."
• "Premium multiples in your sector."
• "Perfect timing for an exit."

James got 23 of these calls over six months. You read that correctly—23…in six months! It felt like validation, proof that he'd built something valuable.

Here's what I wish someone had told him: Most of those calls weren't about buying his business. They were about understanding it.

Private equity firms need to show activity to their investors. They look at hundreds of companies to buy one. Your detailed financials, your customer list, your operational insights—that's valuable intelligence whether they buy or not.

Sometimes they use that intelligence to make a better offer on your competitor. Sometimes they share insights with their existing portfolio companies. Sometimes they're just building a database for future reference.

Those intermediaries calling every week? "We have buyers ready to move!" "Multiple parties interested!" "This is a seller's market!" They're not representing you. They're deal farmers. They get paid when transactions close—any transaction, at any price, on any terms.

We've seen the aftermath of owners who gave even what they thought was "general information" to an intermediary promising a "pre-emptive offer." Six months later, their biggest competitor knew exactly what to bid for their largest customer. How? The PE firm that backed the competitor had seen their entire playbook through that helpful intermediary.

Your confidential information becomes market intelligence. Your margins become benchmarks. Your customer list becomes a shopping list for your competitors.

The friendly intermediary promising a "quick process" and "multiple bidders"? They are marketers creating leads. You and your confidential information become their product.

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The Experience Gap Is Everything

James knew manufacturing inside and out. He could optimize a production line, negotiate with suppliers, and solve customer problems in his sleep. But he'd never sold a business before.

The PE firm across the table? They'd done 47 deals just like this one.

While James was focused on the headline number (5.5x EBITDA sounded great!), they were engineering the real economics through:

• Working capital adjustments
• Escrow provisions
• Earnout structures that would never trigger

His longtime lawyer, great for contracts and routine matters, was facing off against a 400-person M&A firm. His accountant had never defended a quality of earnings audit against professionals whose job is finding problems.

By closing, James's 5.5x became 3.5x in cash he could actually access. The rest was tied up in escrows and earnouts designed to put the risk back to him.

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Watching This Play Out More Than Once

After 16 years of being on both sides of these transactions, a few patterns have become clear:

• Window shopping is real. PE firms need to show that they are looking at a lot of deal flow for their investors. Your business is likely to be a statistic in their quarterly updates. It could be perfect for them, but they will take the meeting even if it isn't. For them, market intelligence is just as valuable.

• Preparation beats intelligence. James was brilliant at running his business but unprepared for selling it. The PE firm had systems, playbooks, and experience. That asymmetry determined the outcome more than business quality.

• There's price and terms—which one is more important? The real negotiation is about more than price. While you're focused on multiples, they're structuring terms that shift risk and economics. Working capital pegs, escrow provisions, indemnification—this is where the real value transfer happens. Every deal is made up of both price and terms. If they are focused on one, then you should be dictating the other.

• Timing matters. This isn't just where the market is trading. James felt pressure to close after being in the process for over six months. Deal fatigue in M&A is real. The mental and emotional exhaustion that sets in when a transaction drags on causes buyers, sellers, and their teams to lose enthusiasm and make poor decisions.

In James' case, his employees knew, customers were asking questions, and competitors were spreading rumors. He felt like he couldn't walk away. That's not negotiation, that's capitulation.

The real danger isn't just that deals might fall apart (though that certainly happens). It's that exhausted parties might push through to completion but end up with terms nobody's truly happy with—or worse, miss critical issues that should've been dealbreakers. I've seen more than one executive team sleepwalk through final negotiations and wake up post-closing wondering what they actually agreed to.

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A Different Approach

James's competitor, the founder who "schooled" that PE firm, spent nine months getting ready before taking a single call.

Not finding buyers—getting ready for them.

He understood exactly where his business created value and where it looked vulnerable. He had documentation for every financial adjustment, benchmarks from comparable transactions, and a clear narrative about his company's defensible advantages.

When the PE firm tried their usual moves, he was ready. They told us later they "had to actually pay fair value" because they couldn't find any edge.

Think about that admission. They don't pay fair value. They pay what they can get away with.

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The Real Insight

James' experience highlights something important: transaction readiness isn't just about the exit. It's about understanding your business the way an investor does.

Companies that run as if they're always six months from a transaction make better decisions. They know which metrics actually drive value, where their risks are concentrated, and how to tell their story in terms investors understand.

Whether you are thinking about selling tomorrow or in five years, seeing your business through an institutional lens changes how you think about growth, risk, and opportunity. The exit optionality is valuable, but the clarity this process brings might be even more so.

The PE firms will keep calling. The intermediaries will keep promising quick processes and premium valuations. But the founders who control their own outcomes? They're the ones who control their destiny and get the best results.

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Key Takeaways

• Most "interested buyer" calls are about intel, not intent.
• The experience gap is stacked against first-time sellers.
• Price is only half the story—terms decide the real economics.
• Preparation flips the script. Without it, you're negotiating blind.

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Ready to Avoid These Mistakes?

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The difference between a successful transaction and a costly mistake often comes down to preparation. Don't let these common errors cost you millions.