TL:DR: Worldwide M&A activity last year reached approximately $4.6 trillion[1], an increase of 49% from the prior year and the strongest annual result since 2021[2]. If an unsolicited acquisition offer arrived tomorrow, would your company be ready?
Acquisition readiness begins by stepping outside your day-to-day operations and looking at the business from the perspective of the buyer. When we help CEOs prepare and position their companies for M&A, we conduct a valuation audit: a buyer-side assessment of the commercial, operational, legal and forward-growth narrative that could strengthen—or undermine—the company’s strategic value.
During due diligence, buyers will scrutinize your operations and bombard you with hundreds of questions. The following are just a few representative categories of questions that an acquirer may ask:
1. Financial quality and unit economics
What drives revenue, gross margin and cash flow? How much pricing power does the company really have? Are margins improving as the business scales? Are financial statements, revenue recognition policies and EBITDA adjustments well documented—and can they withstand a buyer’s quality-of-earnings review?
Buyers want to understand not only how the company has performed, but whether that performance is repeatable.
2. Revenue durability and sales efficiency
How much qualified revenue is in the pipeline? What does it really cost to acquire a customer, and how quickly is that cost recovered? What are customer retention, churn and net revenue retention? What are the average contract values, win rates and sales-cycle length?
Management should be able to produce these figures quickly, explain how they are calculated and demonstrate how they are improving.
3. Market position and Forward Growth Narrative
If the company does not have the largest market share, does it command a disproportionate share of industry attention? Is the CEO recognized as an authority? Is the company’s positioning distinctive, credible and difficult for competitors to appropriate? Buyers want to know they are acquiring a sector leader, and they want to hear you articulate how the business will grow even faster when combined with the resources of the acquirer. That is your forward growth narrative.
A strong brand can support premium pricing, shorten sales cycles and establish the company as a category leader. More importantly, it can help explain why a strategic buyer should value your company at more than a standard EBITDA multiple.
4. Customers and contracts
How concentrated is revenue among the largest customers? Are customers protected by multiyear or automatically renewing agreements? Are contracts assignable following a change of control? What are the company’s renewal, expansion and customer-satisfaction trends?
Buyers will also want to understand which adjacent sectors, customer segments or geographies could provide the next stage of growth.
5. Governance, people and compliance
Who within your company must approve the acquisition? Is the capitalization table accurate? Are board minutes, equity grants and material corporate actions complete and properly authorized? Are employment, confidentiality, invention-assignment and contractor agreements in place?
Buyers are looking for potential risk factors, and anything they uncover can erase valuation quickly during negotiations. A buyer will also examine employee turnover, key-person dependencies, regulatory compliance and whether the company can continue operating effectively after its founders or senior leaders depart.
6. Intellectual property, data and technology
Can the company establish clear ownership of its code, patents, trademarks, data and other intellectual assets? Have employees and outside developers signed appropriate IP-assignment agreements? Is open-source software being used in compliance with its licenses?
For technology companies, buyers may also assess cybersecurity, privacy practices, technical debt, software documentation, data rights and the transferability of third-party technology agreements. Again, they are looking at your risk profile and the potential exposure to lawsuits and other liabilities.
Strong answers to these questions do more than make diligence proceed smoothly. They reduce uncertainty, protect negotiating leverage and make it harder for a buyer to challenge the company’s valuation.
Weak documentation, inconsistent metrics and unresolved legal or operational issues have the opposite effect: they prolong diligence, create opportunities for the buyer to renegotiate, and increase the risk that a promising transaction will lose momentum.
Time is your enemy.
Ask yourself: What systems, documentation and strategic initiatives should you put in place now so that you can answer these questions confidently when a buyer appears?
The best time to resolve a diligence problem is before anyone knows you are preparing to sell. A Rocket Science Valuation Audit can identify potential issues and, even better, find the strategic assets and growth narrative that can help you command a valuation premium.
[1] London Stock Exchange Group (LSEG), “Separating the Signal from the Noise: M&A Booms in Early 2026,” June 9, 2026.
[2] David Thomas, “M&A Lawyers See ‘Bulging Pipeline’ for 2026 After Deal-Crazed Year,” Reuters, January 8, 2026.