Know Your Buyer Before You Negotiate

Welcome back to the Mid Market Insider!

Today, we’re diving into why you should get to know your buyer BEFORE you negotiate, and WHAT you need to know.

Know your buyer before the deal, or risk surprises during and after the sale.

Not all buyers are created equal. SBA buyers and private equity (PE) buyers have very different approaches, priorities, and expectations.

SBA buyers are typically individual entrepreneurs or small teams focused on stability and continuity.

They want a business that runs predictably, maintains culture, and preserves margins. The typical structure is 90% debt, combined from the bank and the seller, so stable cash flows are critically important.

PE buyers, by contrast, operate differently. They’re usually growth and scale-focused, with aggressive financial engineering, corporate processes, and efficiency playbooks.

Some focus on cutting costs and flipping the business quickly, while others invest for growth and scale.

Cultural shifts, reporting requirements, and operational intensity often accompany PE ownership, which can feel very different for the team and owner.

Understanding the type of buyer you’re working with shapes preparation. Financial reporting, operational documentation, and growth strategies should align with buyer expectations.

Knowing the buyer helps set realistic terms, preserve value, and ensure a smoother post-sale experience.

Price isn’t the only factor. Who is buying the business and how they intend to operate it can be just as impactful.

Owners who understand the buyer’s perspective are better prepared to:

• Negotiate terms

• Mitigate surprises

• Ensure the sale aligns with both financial and cultural goals

Final Thought:

I think a lot of people underestimate how bad a sale can go.

It’s not just about price… it’s about the process, the people involved, and how it feels when it’s all said and done.

In a bad divorce, people often end up giving the other side more than their fair share just to get it over with. The emotional toll becomes heavier than the financial one.

A bad sale can feel the same way. You just want it done.

And when that happens, even a “good” valuation can leave a bad taste.

It reminds me a bit of buying something you regret later, the frustration isn’t about what you paid, it’s about what you got. If you overpay but love the outcome, you say it was worth it. But if you overpay and hate it, that sting sticks around.

The same is true when selling your business. If you walk away unhappy with the buyer, the process, or the legacy, what starts as fear of leaving money on the table often ends in regret.

That’s why knowing your buyer and preparing the right way matters so much.

Reader Question of The Week

For context, this is a recent section I’ve decided to add. After receiving many questions in my day-to-day as the co-founder of Four Pillars, I wanted to share the most common ones in my newsletter in hopes that it’s valuable to you in some way.

If you have a question you want answered in a future newsletter, please reply directly to this email and I’ll do my best to answer it. Now, onto this week’s question:👇

Q: “What's the craziest thing that has happened on a deal?”

This wasn't in person, thankfully, but one participant on a Zoom call took off his shirt during the call.

He knew the camera was on, but didn't like how the conversation was going. I don't know what he hoped to prove by doing that, but it only proved that he had a screw loose, on that day at least.

That’s all for today’s newsletter! Thanks for reading!

📅 Next Week:

Next week, I’ll be sharing an announcement that I think many business owners will be excited about. Stay tuned!

Keep building,
Nick

P.S. 

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