Sellers spend months preparing a sale. Very few stop to ask what is happening on the other side of the table. Understanding how buyers think — what drives them, what worries them, who really decides — is one of the most effective ways to improve the outcome of a deal.
Key takeaways
- Buyers are not buying EBITDA or assets. They are paying today for a future they believe in — and they price the risk that it won't happen.
- The person across the table rarely decides alone: investment committees, boards and lenders all have to say yes.
- Late-stage price cuts are often not a tactic. Due diligence reduces uncertainty — and sometimes that changes value.
Whenever people talk about M&A, the conversation almost always revolves around the seller. How should the company be prepared? How should the process be structured? How can value be maximised? How should negotiations be managed?
And rightly so. After all, selling a company is often a once-in-a-lifetime event for an entrepreneur.
But there is another side of the table that receives far less attention: the buyer.
While sellers spend months preparing for a transaction, very few people stop to consider what is happening inside the buyer's organisation — what really drives their decisions, what concerns them, and how their advisors think.
And yet, understanding the buyer's psychology is one of the most effective ways to improve outcomes in M&A.
1. Buyers are not buying a company
At least not in the way most sellers think. Founders often believe buyers are purchasing revenue, EBITDA, customers or assets.
In reality, buyers are buying something much more intangible: a future. They are paying today for what they believe the company can become tomorrow.
That is why two buyers can look at exactly the same business and arrive at very different valuations. The numbers may be identical. The future they see is not.
2. Buyers don't buy opportunity. They buy risk.
One of the biggest misconceptions in M&A is that buyers focus primarily on upside. They don't.
Most experienced buyers spend far more time analysing what can go wrong than what can go right. In many investment committee meetings, the discussion is not "Why should we do this deal?" It is "What are we missing?" or "What could go wrong?"
Buyers are professionally trained to think defensively. Their first instinct is not value creation. It is risk management.
3. The asymmetry of information
Every buyer enters a transaction knowing one uncomfortable truth: the seller knows more than they do. Always.
The seller has lived with the business for years. The buyer has known it for weeks.
This creates a natural level of suspicion — not because buyers distrust sellers, but because they know there are things they don't know. Which explains why due diligence often feels excessive from the seller's perspective. The buyer is not simply looking for information. They are trying to reduce uncertainty.
And uncertainty has a direct impact on value.
4. Buyers rarely make decisions alone
This is another area frequently misunderstood by sellers. Founders often believe they are negotiating with an individual — the CEO, the owner, the deal lead, the private equity partner.
In reality, they are negotiating with an organisation. Behind every buyer there are often:
- Investment committees
- Boards
- Lenders
- Operating partners
- Internal experts
- External advisors
And each of them views the transaction through a different lens. The person sitting in front of you may love the deal. That does not mean the deal is approved.
One of the most common mistakes sellers make is confusing enthusiasm with authority.
5. Why buyers suddenly become tougher
One of the questions I hear most frequently is: "Why are buyers so positive at the beginning and so demanding at the end?"
The answer is simple. At the beginning, they are evaluating the opportunity. At the end, they are evaluating the risk.
The process naturally shifts from optimism to scrutiny. And this is not necessarily bad faith. It is how decision-making works. The closer a buyer gets to signing, the more responsibility they feel. The more responsibility they feel, the more questions they ask. And the more questions they ask, the more issues they discover.
6. Why prices get reduced in the final stages
Many sellers interpret late-stage price reductions as a negotiation tactic. Sometimes they are. But often there is something deeper happening. As the transaction progresses:
- More information becomes available
- More stakeholders get involved
- Financing providers review assumptions
- Investment committees challenge projections
What looked attractive at the start may suddenly look riskier. And in M&A, increased risk almost always translates into lower value.
A real case: the logistics company and its capitalised costs
I remember one transaction that illustrates this point particularly well. I was advising the buyer in the acquisition of a logistics company. At first glance, the business appeared to deliver strong and consistent EBITDA, and both parties were broadly aligned on valuation.
During the financial due diligence, however, we discovered that a significant portion of the costs related to the development of the company's transport management software had been capitalised. After a detailed review, it became clear that many of those expenditures were not developing new functionality but maintaining and updating the existing platform. In other words, they should have been recognised as operating expenses rather than capitalised assets.
The consequence was straightforward: reported EBITDA had been overstated. This inevitably led to a material adjustment in the purchase price.
Was the buyer trying to renegotiate the deal? No. The buyer was simply pricing a business based on a better understanding of its underlying economics.
The seller was understandably disappointed, but ultimately accepted the adjustment because the analysis was well supported. The transaction closed successfully.
It was a useful reminder that due diligence is not designed to reduce price. It is designed to reduce uncertainty. And sometimes, reducing uncertainty changes value.
This is why experienced advisors spend so much time preparing before launching a process. The best way to defend value later is to reduce surprises earlier. (More on that preparation in Selling your company: 14 questions to answer before you start.)
7. Understanding the buyer changes everything
One of the most important lessons I learned in M&A is this: the best negotiators do not focus on their own position. They focus on understanding the position of the other side.
What pressures are they under? What risks concern them? Who do they need to convince internally? What would make them uncomfortable? What would make them move faster?
Once you understand these questions, the behaviour of buyers becomes much easier to predict. And if behaviour becomes predictable, outcomes become easier to influence. It is also the starting point for creating real competitive tension in a sale process.
A final thought
M&A is often presented as a financial exercise. But beyond the models, the valuations and the legal documents lies something much more human: decision-making under uncertainty.
Every buyer is trying to answer a single question: "What could happen the day after signing?" (I explored that day after in The Day After: why M&A value is won or lost after closing.)
The better a seller understands that question, the better positioned they are to answer it.
Harper Lee put it well: you never truly understand someone until you see things from their point of view. M&A is no different.
And if I had to reduce it to one line: you don't win by knowing your own number. You win by knowing theirs.
Frequently asked questions
What do buyers look for when acquiring a company?
Buyers look for a credible future: sustainable earnings, growth potential and synergies. But they spend most of their time on risk — what could go wrong, what they don't know, and how reliable the numbers really are.
Why do buyers lower the price late in an M&A process?
Sometimes it is a tactic, but often due diligence uncovers information that changes the risk profile — for example, EBITDA overstated by capitalised costs. More information and more stakeholders usually mean more scrutiny, and higher risk means lower value.
Who really makes the decision on the buyer's side?
Rarely one person. Investment committees, boards, lenders, operating partners and external advisors all influence the final decision. The deal lead's enthusiasm does not equal approval.
How buyers value, negotiate and run due diligence is covered step by step in the M&A Training Program and in my book Mergers & Acquisitions: Strategy, Execution, and Decision-Making.
First published in Inside Corporate Finance, my LinkedIn newsletter. Subscribe here.
