1. “How do you like to qualify whether a buyer actually has the capital to close a deal?”

• Gut check vs. formal proof
• Differences between PE-backed and strategic buyers
• What’s reasonable to ask for and when in the process

2. “What are some of the best ways a buyer can demonstrate proof of funds early in a process?”

• Equity commitment letters
• Bank letters or balance sheets
• Fund-level detail for PE buyers
• Is a LOI ever enough?

3. “When you see a buyer lean heavily on an earnout or seller note, what does that tell you about their financial strength?”

• Earnouts as risk-transfer vs. alignment tool
• Sign of limited capital vs. aggressive valuation
• How to structure a seller note to reduce risk

4. “Have you ever had a deal fall apart because the buyer couldn’t come up with the money?”

• Anecdotes of broken deals or red flags missed
• What should have been asked earlier
• Lessons learned about screening buyers

5. “What questions should sellers be asking to vet a buyer’s financial capacity?”

• Go-to questions to ask PE firms, family offices, strategics
• What not to ask (or how not to ask it)
• How advisors help behind the scenes to validate

6. “If a seller gets an offer that looks strong on paper — big multiple, big earnout — what’s your advice for validating it’s real?”

• The danger of being ‘seduced by the headline multiple’
• Discounting for deal structure risk
• How to tie offer strength to real-world execution ability

7. “Are there particular red flags you see when a buyer isn’t financially credible?”

• Delayed diligence or ghosting
• Lack of transparency around capital source
• Too many approvals needed — unclear decision-makers
• Offers contingent on future fundraising

8. “What’s the advisor’s role in protecting the seller from wasting time with unqualified buyers?”

• Quietly vetting buyers behind the scenes
• Managing buyer engagement based on credibility
• Pulling in references or past deal history

9. “What’s your take on PE firms that haven’t yet closed a platform in the space — does that change how we qualify them?”

• Platform vs. add-on credibility
• Operational readiness of first-time buyers
• Importance of fund age and deployment schedule

10. “At what point in the process do you think it's fair for a seller to ask for hard financial evidence?”

• Pre-LOI vs. post-LOI
• How to handle it without offending
• When to walk if transparency isn’t there

RELATED EPISODES

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Episode 97: Understanding Search Funds as an IT Services Seller. Listen now >>

Episode 99: IT Services Sellers: Evaluating the Size of a Buyer. Listen now >>

Listen to Shoot the Moon on Apple Podcasts or Spotify.

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