Mergers & Acquisitions Advisory

A Neumann & Associates, LLC

September 16, 2021

Properly Pre-Qualified Investors

By Karin Neumann


Usually, a business owner’s goal is to sell their business to the right buyer for maximum value and to preserve the business’ legacy. Most often, business owners have little experience and time to devote to find and qualify prospective buyers. Thus, it is therefore advisable for the owner to rely on professional M&A advisors to identify buyers to support the owner in the transfer of the business.

Prior to identifying and qualifying buyers, the asking price for the business has to be established through an independent, 3rd party valuation, after which the advisor will prepare the business for sale. In the first step, the advisor will create two marketing documents:

  • a “blind” business profile including key information and financials and an executive summary to advertise the business in a confidential manner but to give sufficient information to buyers to decide if they want to inquire about the business;
  • a Confidential Memorandum outlining the business operation including tax return based financials as well as strength, weaknesses and, most importantly for an investor, the growth potential plus a 3rd party accredited valuation to support the asking price.

After the business owner has approved the marketing documents, the M&A advisor will create two marketing plans, consisting of a re-active and pro-active marketing approach:

  • posting the business with information from the “blind” profile on major business-for-sale websites in a non-divulging fashion, never releasing the company name or location;
  • extracting relevant buyers out of a proprietary database, and then creating USPS and email campaigns, segmented by industry sectors.

Once the marketing plan has been implemented, investors will respond to the advertising and request additional information. Many investors are not right for a seller and – if not identified early – will waste a lot of time and delay a sale. Ultimately, different types of investors will be responsive, to be individually prequalified:

  • Strategic (Corporate) Buyers – companies from within the industry looking for synergies; these buyers can be suppliers, customers, competitors or companies which could benefit from expanding into a new market segment or using established distribution channels for their own products.
  • Financial Buyers – groups such as private equity firms which make acquisitions as investments; these buyers are usually looking to improve and grow the business and sell for a profit within a few years;
  • Individual Investors – looking to buy a company to run/oversee themselves, which is more common in smaller transactions

The goal is to reach a maximum of pre-qualified investors to increase leverage for the seller!

With multiple buyers contacting the M&A advisor, why then is the pre-qualification so important, to find out as early as possible if a buyer is really not interested, not in a position to purchase a business or just on a “fishing expedition”?

  • Confidentiality: the more buyers know that a business is for sale, the harder it is to maintain confidentiality; by not adequately screening investors, confidentiality can be breached with negative impact on the business due to a loss of clients and employees;
  • Time spent: it is essential that only buyers who have a clear interest and the ability to execute a deal receive the Confidential Memorandum; usually one third of pre-qualified investors will ask for an introduction with the business owner after reviewing the Confidential Memorandum; if buyers aren’t sufficiently screened by the advisor, the owner will be pulled into a time-consuming process instead of focusing on running the business.

How does the advisor differentiate between these buyers? Once an investor responds to an advertisement and request additional information, the advisor should send out the following pre-qualification documents to be filled out by the buyer:

  • Non-Disclosure Agreement (protecting the seller’s confidential information)
  • Investor Profile & Management Experience
  • Financial Statement

Buyers who refuse to complete the pre-qualification documents are usually not serious buyers and there is no reason to waste time with them. Any investor who is seriously looking to buy a business should expect to be pre-qualified and should have the information readily available.

The advisor will review the information provided with focus on the following areas:

  • Financial Capabilities: does the buyer have sufficient cash/assets available for the down payment and working capital? Is there sufficient collateral for bank or seller financing? Has the buyer already received pre-approval from a bank? Does the buyer have any investors supporting the acquisition and if so, did he provide sufficient documentation?
  • Management/Industry Experience: Does the buyer have any experience in the industry or have they held any managerial positions in the past? Are they planning to run the business themselves or do they intend to keep the current management? These questions are especially important when bank financing is involved;
  • Acquisition Experience: has the buyer made any offers or managed any acquisitions in the past and do they understand the process from pre-qualification to closing?

Only after a successful pre-qualification should the Confidential Memorandum – disclosing company name and location – and 3rd party independent valuation be sent to the buyer. Once the buyer has reviewed the Confidential Memorandum and decided that there is sufficient interest in the business, they will ask for a buyer/seller introduction.

If the buyer seems to be a good fit, the advisor will schedule a call/meeting with the business owner to discuss the operation; if requested, the advisor will provide additional financial information and set up a site visit for the investor. Subsequently, if the buyer is ready to move forward with the acquisition, they will issue an offer to purchase or letter of intent.

If multiple offers are being made by different investors, the advisor will prepare an overview for the business owner to outline the differences between the offers and to support the business owner in the decision-making process to choose the right buyer.

In sum, the proper buyer pre-qualification is absolutely crucial in not wasting time for the seller, the M&A advisor and to avoid any compromising of the business’ confidentiality.

About A Neumann & Associates, LLC

A Neumann & Associates, LLC is a professional mergers & acquisitions and business brokerage firm having assisted business owners and buyers in the business valuation and business transfer process through its affiliations for the past 30 years. With an A+ Better Business Bureau rating, the company has senior trusted professionals with a deep knowledge based in multiple field offices along the East Coast and has performed hundreds of business valuations in its history. The firm’s competitive transaction fees are based on successfully completing transactions. For more information, please contact A Neumann & Associates at 732-872-6777 or

Leave a Reply

Your email address will not be published. Required fields are marked *

Any questions? Please contact us at 732-872-6777
Call Now

Client Testimonials

“I had been in touch with Karin and Gary from A Neumann & Associates regarding some opportunities and was looking forward to meeting with them. Hence, when they organized a seminar in Princeton, NJ, I was quick to sign up. The seminar was very informative as the team walked the attendees through various scenarios and referenced real life buying/selling situations they had been through. The sessions by Gary, Karin and Achim were crisp and focused and brought clarity to potential seller and buyers. I strongly recommend the team and look forward to continue working with them.”

Gaurav Tyagi

“Thank you for your Event on "How to value, Sell, and Buy A Business for Maximum Profit" and the insight into ANA’s approach on what is involved in the Business Exit for sellers. Garys Hervieiou's "Business Valuation", Achim's "Deal structure" presentation and Karin’s "Preparing the Package" are real street knowledge shared. They answered attendees questions which makes it more interesting for learning from others. Great for small businesses like us. The presentations were totally worth our time and travel for the event to Princeton, NJ from Rockville MD. Ravi Bhutani, President, CIPS”

Ravi Bhutani

“Gary, this is to thank you for an excellent job done in selling our business. We could never have done it without your professional expertise, dedication and time put in without reservation to make it happen. We will gladly and highly recommend you to anybody in our position.  It was a pleasure to work with you.”

Pat Iammatteo, Owner

“Your vetting is simply outstanding, among the best I've seen from a broker.”

Eric H., Investor

“I recently contacted A. Neumann and Associates about getting a valuation of my business done. I spoke with Marc, who explained the process in detail. After meeting with Marc in order to get a clear understanding of my business, and what I was hoping to accomplish. His patience in answering all my questions and his knowledge of the proper way to market my business gave me great confidence that this is the firm I will be using to sell my business for max value. Working with Marc at A Neumann & Associates was very easy and professional. I did not know all that was going to be involved in selling my business but they helped me through the process. What I thought was going to be a just another one of those pushy sales companies was just the opposite. Polite, knowledgeable, and a pleasure to talk to and deal with. I highly recommend this firm to anybody who wants to sell now or down the road. Marc not only knows his stuff, but actually is a real nice guy.”

Double Diamond

“Used A Neumann & Associates to sale my business. could not imagine having done it with out the patience and experience Gary provided. Thanks Gary,”

Dennis Frazier

“Working with Marc and his company was a pleasure. What I thought was going to be a just another one of those pushy sales companies was just the opposite. Polite, knowledgeable, and a pleasure to talk to and deal with. Marc handled most of the interaction and he has one of the greatest demeanors. Again, it was a pleasure working with him and his firm.”

Douglas DiCeglio

“I recently completed an acquisition using A Neumann & Associates. Tony Valentino was very helpful and accessible during the entire process. They do a thorough job vetting both parties and got us to the finish line.”

Srini Mudambi

“Claus out of Florida helped us with the sale of our business. We had never done anything like this and him and his team walked us through the process from start to finish. We had some challenges through the process and Claus continued to show up even in the difficult conversations.”

Colby Harris, Co-Owner, Del Mar Designs

“Claus Madsen thoroughly helped us with selling our company. From the 1st introductory meeting explaining to us what was possible, to providing us with resources to assist with the sale. Claus was invaluable throughout the whole sales process. Claus was with us every step of the journey and always made himself available for any questions or issues that came up along the way. If you are interested in selling your business, I encourage you to reach out to Claus and the ANA team so that they can let you know what’s achievable. These guys will make it happen!”

Ron Harris, Co-Owner and Vice President, Del Mar Designs
view all testimonials

Contact A Neumann & Associates, LLC

If you are considering selling your business, please contact us to learn more about our comprehensive service spectrum. Our experienced professionals will answer all your questions about selling a privately held business in complete confidentiality. Please fill out our contact form, or call us at 732-872-6777. We will contact you directly and will never identify ourselves to your employees.

call us now
Contact Us for a Free, Confidential Consultation

Experienced M&A Advisors available

Full Name
Email Address
Phone Number