EPISODE 243. The Sell Side Masterclass for Tech Services Founders: Finding the Right Buyer

Other Episodes in this Series

Part 1. Knowing When It’s Time to Sell: Listen now >>

Part 2. Get Your House in Order: Listen now >>

Part 3. Valuation Drivers: Listen now >>

Part 4. What is my Take Home? Listen now >>

Part 5. It Takes a Village. Listen now >>

Part 6. The First 30 Days of a Process. Listen now >>

EPISODE TRANSCRIPT:

Mike: Hello and welcome to this week’s Shoot The Moon podcast broadcasting live and direct from Revenue Rocket, world headquarters in Bloomington, Minnesota. For those of you that tune in regularly. And even for those of you that don’t Revenue Rocket is the world’s premier, M&A advisor to IT services companies worldwide. With me today, are my partners, Matt Lockhart and Ryan Barnett, welcome guys.

Matt: Thank you, Mike. We’re continuing our awesome master class today, which has been a huge success. And I think it’s great. Now, we got to start thinking about what the next master class is going to be, Ryan, but I guess let’s not get a hold of our—or get ahead of ourselves. What’s going on Ryan!

Ryan: Well, yeah. To your point, we’re continuing the master class and this is really targeted towards IT services owners and founders and CEOs of firms and tech enabled services businesses and what it means to sell your firm in 2026. And so far we talked about the decision to sell, getting your house in order, figuring out what your company is worth, what you actually take home, what team you have around you, and what that first month looks like.

The next stage is: once you’re committed, you understand the value of your company and you start executing on the process. When you think about those tasks here at Revenue Rocket, it starts to become a parallel effort. Your marketing materials are being prepared to help put your company into market. So things like a teaser, a Confidential Information Memorandum (CIM), and a financial packet are all put together.

But just as important in that process is understanding who should buy the company that we’re representing. And so this episode’s really for sellers and understanding: how do you start to think about buyers when you’re in the process?

And Mike, man, we’ve got a number of questions. We do this well and it’s an area that we’ve spent a lot of time in. I want to start out with the most basic question I’ll throw to you, Mike: at a high level, what does finding buyers mean in a professional sell-side process?

Mike: Good question, Ryan. Finding buyers is really about defining the buyer universe, right? There’s more to it than that, but as you think about suitor targeting…

Matt: And origination?

Mike: And structured outreach. When you think about it, you want to identify those prospective buyers that are most likely to be interested in your business—those that are the best strategic fit, those that have the capital, those that have the appetite, and those that have a track record of doing deals.

Ryan: So when you say “define the buyer universe,” what does that actually look like? How do you go about building that?

Mike: It’s a combination of understanding the seller’s business and how it fits into the marketplace, looking at comparable companies and who’s acquired them, looking at who’s active in the space, and then building a list across different buyer categories. Typically you’re going to have strategic buyers, financial buyers, and sometimes individuals or family offices depending on the size and nature of the business.

Matt: And when we say strategic vs. financial—can you define that a little bit?

Mike: Sure. Strategic buyers are operating companies. They’re buying because there’s some strategic reason: they want capabilities, customers, geographic expansion, talent, intellectual property, or they want to accelerate growth. Financial buyers are buying primarily as an investment. They’re looking at return on capital and typically they’ll use leverage and/or plan for a future exit.

Ryan: So if you’re a seller, how should you think about which bucket is “better”?

Mike: It depends on your goals. Strategics can sometimes pay more because of synergies, but financial buyers can be a great fit if you want to stay involved, roll equity, or if you like the platform story and the chance to take a second bite at the apple. The “best” buyer is the one that aligns with what you want and is most likely to get to close.

Matt: That last part is big: “most likely to get to close.” Because there are buyers that look good on paper and then they don’t perform.

Mike: Exactly. And this is why you don’t want to just take the first offer and run at it. You want optionality. You want multiple buyers engaged so you can compare not just price, but structure, terms, cultural fit, and certainty.

Ryan: Let’s talk about certainty. What are the characteristics of buyers that are “more certain”?

Mike: Track record matters. Buyers that have done deals in your space before, that have an internal M&A function, that know how to underwrite services businesses, that move with discipline. A buyer that needs to “figure it out” in diligence is a buyer that may struggle. Certainty also comes from alignment—if you’re in their thesis, if you fit their strategy, and if they know what they’re buying.

Matt: And there’s also the issue of “buyer intent” versus “buyer capability,” right?

Mike: Right. Some buyers are very interested but they can’t get it done—capital isn’t committed, they don’t have leadership support, they don’t have the bandwidth, or they’re trying to learn while they execute, which is risky. Other buyers can absolutely get it done, but they’re not the right fit. The best outcomes come from identifying the intersection of fit and ability to close.

Ryan: Walk me through how we actually do this in a process. Because sellers might think it’s “we just call buyers,” but it’s more than that.

Mike: It is. We start with a story—how do we position the business in a way that resonates with different buyer types. Then we build a target list. That list is informed by experience, data, relationships, and research. Then we do outreach in a structured way. The outreach typically starts with a teaser, then NDAs, then sharing the CIM and financial packet, then management calls, then meetings, then indications of interest, then LOIs.

Matt: And the buyer list is not static. It evolves.

Mike: Exactly. As you go through outreach, you learn. Some buyers aren’t actually active. Some are active but in a different way than they say. Some are active and great. You also get inbound interest. So we refine.

Ryan: What are common mistakes sellers make when they think about buyers?

Mike: One is assuming the “obvious” buyer is the right buyer. Another is assuming a big name equals a better outcome. Another is letting a buyer control the pace of the process. Another is being too narrow. And probably the biggest mistake is running a process without competitive tension—only talking to one or two buyers.

Matt: Or the opposite: being too broad and attracting the wrong kinds of buyers.

Mike: Yes—if you don’t curate, you can waste time. You can expose yourself to parties that shouldn’t see your information. You can distract your leadership team. You can create confusion. This is where a good advisor helps—curation and control.

Ryan: Let’s talk about strategic buyers specifically. What do they typically care about in services?

Mike: They care about customers, revenue quality, recurring revenue, client concentration, delivery capabilities, key employees, and how the acquired company can integrate. They may care about vertical expertise, geographic footprint, security certifications, partnerships, and in many cases the ability to cross-sell.

Matt: And they care about risk. So if the business is too dependent on the owner, too concentrated, or the delivery model is fragile, it’s harder.

Mike: Exactly. And that ties back to earlier episodes. Seller readiness directly impacts buyer interest and buyer confidence.

Ryan: And financial buyers—what’s different?

Mike: Financial buyers care about cash flow, growth, predictability, and scalability. They’ll look at margins, working capital dynamics, customer retention, pipeline, and the strength of the management team. They’ll also look at how the business fits into their investment thesis. Financial buyers are often more comfortable with a platform + add-on strategy, which can work well for certain sellers.

Ryan: So how should sellers think about “platform” versus “add-on”?

Mike: A platform is typically the first acquisition in a new thesis or a key acquisition that stands on its own with scale, management, and infrastructure. An add-on is something that plugs into an existing platform—often smaller, sometimes more niche. The outcome for the seller can be great in either case, but the buyer’s expectations and integration approach can differ.

Matt: I also think it’s important to talk about cultural fit. Sellers don’t always prioritize that early enough.

Mike: That’s right. Culture shows up in diligence and post-close. How they treat people, how they make decisions, how they communicate, what their reporting expectations are. You should evaluate culture just like they evaluate your numbers.

Ryan: What about international buyers? We’ve seen more of that.

Mike: Yes, depending on the sector and the business, you can see overseas strategics and sometimes international funds. That can expand the buyer universe, but it also introduces complexity—regulatory, currency, timing, and integration considerations. It’s not always better, but it can be a good lever.

Ryan: So if you’re a seller listening—what’s the takeaway? How do you think about buyers in the process?

Mike: Think of it as part strategy, part research, part execution. You want the right mix of buyers, you want optionality, and you want a structured process. You also want someone who can run outreach and manage buyers, because buyers will test you. They’ll test your process, your narrative, your numbers, and your resolve.

Matt: And the right buyer list, built by someone who knows the market, changes everything.

Mike: It does. It increases the odds you find the right buyer, increases the odds you get competitive tension, and increases the odds you get to close with a buyer that aligns with your goals.

Ryan: That’s a great spot to wrap. Any closing thoughts, Matt?

Matt: Great topic. As we continue to say: specialization matters. The more specialized the firm that you work with, the better chances that you’re going to have the right buyer list. And it’s important—it will make the process go easier, more smoothly, and certainly more rewarding overall.

Ryan: Where do we take it from here?

Mike: Time to tie a ribbon on it for this week’s Shoot The Moon podcast. I encourage you to tune in next week for the next installment of this masterclass. And with that, make it a great week. Thanks for tuning.