Creating a buyer list in an M&A process is a delicate balancing act. The temptation to cast an extremely wide net—to include hundreds of potential buyers—may seem like a good idea. After all, wouldn’t more buyers equate to a better chance of closing a deal at the desired valuation? In reality, this “boil the ocean” approach often leads to frustration, inefficiencies, and missed opportunities for sellers. Here’s why refining your buyer list is critical and how you can do it effectively.

The Pitfalls of Overpopulated Buyer Lists

Some M&A advisors create bloated buyer lists to demonstrate effort or appease sellers, promising outreach to “everyone.” While it might look impressive on paper, this strategy creates several issues:

• Unrealistic Seller Expectations
  When brokers claim they will contact hundreds of potential buyers, sellers often assume a corresponding wave of interest and offers. The truth is, many of these buyers are not serious prospects; they lack strategic alignment, financial capability, or even experience in M&A. As a result, sellers are left wondering why responses are sparse despite an expansive list.
• Diluted Engagement
  Instead of focusing energy on high-potential buyers, brokers stretch their resources thin by contacting irrelevant or unqualified companies. This reduces the quality of buyer interactions, often leading to missed opportunities with genuinely interested parties.
• Perception of Spam
  When non-strategic buyers receive M&A teasers without relevance, they often view the outreach as spam. Non-responses or outright rejections may follow, further disillusioning the seller and creating an atmosphere of failure or doubt in the process.

Rather than aiming for quantity, successful M&A processes prioritize quality. A strategic buyer list typically consists of 50-70 carefully vetted candidates. These buyers:

• Have a clear strategic fit with the seller’s business, whether through complementary products, geographic reach, or market synergies.
• Possess the financial resources and internal M&A expertise necessary to close the deal.
• Show a history of successful acquisitions or express active interest in the seller’s industry.

By targeting these ideal buyers, you create an environment where discussions are more meaningful, timelines are manageable, and the likelihood of receiving multiple offers increases.

Enough Competition Without Overreach

A well-crafted buyer list still allows for competitive tension—an essential ingredient in maximizing value through price discovery. An auction process works most effectively when focused on qualified bidders who appreciate the company’s strategic value. Hemisphere Partners often designs processes to create this balance, ensuring that sellers benefit from a competitive environment without the noise of uninterested parties.

The Value of Targeted Outreach

An M&A process built on focused, high-value buyer engagement is far more likely to succeed than one relying on a shotgun approach. For sellers, this means partnering with an advisor who understands the strategic nature of buyers, ensures meaningful discussions, and doesn’t set false expectations. By avoiding the trap of “boiling the ocean,” you create a smoother, more rewarding sale process that delivers results.

At Hemisphere Partners, we guide sellers through this process with precision, drawing from our experience as former software founders and M&A advisors. If you’re preparing to sell, let’s discuss how a tailored buyer list can maximize your company’s exit potential.