The treasure hunt: How to source suitable acquisition targets

One of the most proactive targeting tools is structured industry research: compiling lists of companies using resources such as industry directories, trade associations, and commercial corporate intelligence databases based on available data from Companies House. The sources provide valuable information on company size, ownership, financials, and operational scope. By filtering through the data using your strategic criteria – geography, sector, and revenue, etc. – you can build a tailored list of potential targets that align with your acquisition goals.

In comparison to reviewing the companies within an industry, you can search by industry characteristics. For example, gathering and analysing data on industry trends, emerging technologies, customer behaviour, and competitive dynamics can provide inspiration. By understanding where the market is heading, you can identify businesses that are well-positioned for growth or disruption – making them attractive acquisition candidates.

There are various tools which offer valuable insights into sector performance and forecasts, whilst custom research can uncover niche players or under-served segments. Intelligence gathering also includes monitoring regulatory changes, demographic shifts, and macroeconomic indicators that may influence acquisition timing or strategy. This method ensures that your acquisition efforts are grounded in data and aligned with market movements.

Analysing your competitors can reveal acquisition opportunities that are both strategic and synergistic. Whilst competitors may seem like unlikely partners, many are open to discussions if the deal offers mutual benefits, such as market consolidation, access to new capabilities, or an exit route for founders. This method also ensures an acquirer keeps up to date with market dynamics by identifying players who are vulnerable or looking to pivot.

At this stage, our objective is to identify potential targets and further develop acquisition strategies; accordingly, it is essential to analyse both the strengths and weaknesses of competitors. A competitor may possess nuanced distinctions from your own business that could inspire new ideas or provide a logical basis for pursuing alternative types of operations.

Your existing business relationships can be a goldmine for acquisition leads. Suppliers and customers often have deep insights into the industry and may know of businesses that are open to a sale or investment. By leveraging networks, you can uncover opportunities that are not publicly listed and benefit from warm introductions that build trust early in the process. This approach also ensures a level of operational compatibility, as the businesses and employees are already part of a similar ecosystem.

To expedite matters, either looking to speed up the process or find the best possible range of targets across on and off-market opportunities, it is worthwhile to seek external assistance.

Many M&A transactions are facilitated by corporate finance advisers who maintain confidential lists of businesses seeking investment or exit opportunities. These professionals often have deep sector knowledge and can match buyers with sellers based on strategic fit. Engaging with advisers early can give you access to off-market deals and help you navigate complex negotiations with greater confidence.

Industry brokers operate in a similar fashion to corporate finance advisers at the target identification stage but often focus on specific sectors or deal sizes and may not provide the same support throughout the later acquisition stages. Brokers will typically introduce a curated list of potential sellers, and can provide sector expertise when targeting niche . Whilst brokers can connect parties, their role is often limited and M&A or CF advisers are likely to still be required to see a deal over the line.

Professional advisers such as lawyers and accountants are often the first to know when a business owner is considering a sale. They may be involved in succession planning, tax restructuring, or legal preparations ahead of a transaction; therefore, building relationships with these professionals can provide early access to acquisition opportunities and help you stay informed about market activity before it becomes public knowledge.

Financial screening allows you to narrow down potential targets based on quantitative criteria, ensuring that any acquisition is both strategically and economically viable. Using platforms, companies can be filtered by revenue, EBITDA, profit margins, growth rates, and past valuation multiples, which helps to identify businesses that are financially healthy, scalable, or on the contrary, stagnant and in need of new ownership. Screening for distressed assets – companies with declining performance or liquidity issues – can reveal turnaround opportunities at lower entry costs.

Financial screening also supports risk assessments by highlighting red flags such as high debt levels, inconsistent cash flows, or legal liabilities. When combined with qualitative analysis, this method provides a comprehensive view of a target’s financial health and potential for value creation.

Monitoring industry news, press releases, and trade publications/subscriptions can reveal subtle signals that a company may be open to acquisition. Announcements about new product launches, leadership changes, funding rounds, or award wins often indicate a business that is growing, evolving, or preparing for a strategic shift. These signals can serve as a prompt for initiating a conversation before competitors do.

Digital deal platforms offer a wide range of acquisition opportunities, from small owner-managed businesses to high-growth startups, as well as more mature businesses. These platforms allow you to filter by sector, location, and deal size, making it easier to find on-market acquisition targets that meet your criteria. Many also include anonymised profiles, allowing for discreet initial engagement.

However, these companies are ‘on-market’ and as a result may have higher valuation expectations prior to initial discussions (fuelled by unrealistic promises by their broker/ advisers), in addition to being engaged in a competitive sales process with sell-side advisers who will run an auction-style process with bidding rounds between interested parties. Ideally, you will want to avoid the risk of over-paying for a business by originating off-market opportunities.

Attending sector-specific conferences, expos, and networking events is a powerful way to meet potential targets face-to-face. These events provide a forum for informal discussions, relationship building, and market intelligence gathering. They also allow you to assess company culture and leadership first-hand, factors that are often critical in successful acquisitions.