When you decide to sell your business, it’s normal to focus on the headline numbers: revenue, EBITDA, and the multiple you hope to achieve. But from a buyer’s perspective, those numbers are just the starting point. The real work begins when they start assessing risk (in every corner of your company).
As a professional intermediary at Viking, one of the most valuable ways I prepare clients for a successful sale is by helping them understand how buyers view risk. Understanding a buyer’s view of risk is essential to minimizing it before going to market.
Below are six types of risk a buyer will investigate, along with tips I give my clients for anticipating and addressing them in advance.
1. Financial Risk
Buyers want to understand the quality of your earnings — not just how much you make, but how predictable, durable, and “sticky” those earnings are. They’ll analyze trends in revenue, margins, and cash flow, and examine customer concentration, churn or retention rates, seasonality, and working capital needs. A high proportion of contractually recurring revenue gives the buyer much more confidence (and a more solid baseline) — it’s the kind of revenue you “have in your back pocket” from day one.
Tip: Make sure your financials are clean, consistent, and professionally prepared. Be ready to explain any one-time or discretionary expenses that impact profitability and be explicit about which parts of your revenue are recurring (and how strongly customer contracts, switching costs, and retention metrics support that claim).
2. Customer and Revenue Risk
A diversified and stable customer base signals lower risk. If one or two customers represent a large share of your revenue, buyers will see that as a potential vulnerability. They’ll also assess the strength of your customer relationships, contract terms, and renewal rates.
Tip: If possible, show long-term contracts, recurring revenue, or other evidence that customers are “sticky.”
3. Operational Risk
Buyers evaluate how dependent the business is on the owner or a few key individuals. If too much of the know-how, relationships, or decision-making sits with you, that’s a red flag. They’ll also consider the strength of your management team, systems, and processes.
Tip: Start delegating key responsibilities and documenting processes well before you sell.
4. Market and Competitive Risk
Every buyer asks: How defensible is this business? They’ll look at your competitive positioning, market trends, barriers to entry, and any regulatory or industry changes that could affect future performance.
Tip: Highlight what differentiates your business — proprietary processes, customer loyalty, unique contracts, or reputation — and back it up with data.
5. Legal and Compliance Risk
Buyers will review contracts, leases, permits, employee classifications, and any pending disputes or liabilities. Unresolved legal or compliance issues can delay or derail a deal.
Tip: Conduct a light “pre-diligence” review before going to market to identify and fix issues early.
6. Cultural and Integration Risk
Even in financial transactions, culture matters. Buyers assess whether your company’s values, management style, and employee base will align with theirs. Poor cultural fit can make integration difficult and reduce perceived value.
Tip: Present your company as organized, transparent, and collaborative throughout the process.
The Bottom Line
Buyers are not just buying your financial performance — they’re buying your future reliability. Every perceived risk gets priced into their offer. The more you can anticipate and address those risks in advance, the more leverage you’ll have when it comes time to negotiate.
Well-prepared sellers don’t just attract more buyers — they command stronger offers and smoother closings.
Preparing the Story Before You Go to Market
Before approaching buyers, it’s essential to take an honest, thorough look at your business through their eyes. Identify potential risks, strengthen your weaknesses, and refine the aspects that make your company valuable and defensible. Then, work closely with your advisor to craft a clear, compelling narrative that highlights not only what your business has achieved, but why it will continue to thrive under new ownership. The more time and care you invest in preparing your story, the more confidence buyers will have in the opportunity — and the better results you’ll achieve at the closing table.