Buyers have their own reasons for buying a company.  Depending on whether they are financial buyers, strategic buyers or foreign companies, they will definitely have their own purchasing criteria.

Below are some of the questions that buyers ask when considering whether a company is a possible acquisition candidate.  The legendary former head of ITT, built the company’s revenues from $766 million to $22 billion, largely through acquisition.  He used the following criteria when considering the purchase of a company.

  • Is the business in a growing or declining market?
  • What is the company’s rate of return?
  • How easy will financing the transaction be?
  • What are the necessary capital investments?
  • How much stress on management will there be?
  • Is the product or service repeat business?
  • Is it bid work or rapidly changing technology?
  • Can the buyer add value?
  • Can the company fit into the acquiring company’s systems?
  • Does the company earn money in good and bad times?
  • Is the company really available for sale?