Acquisition · Acquisitive growth
Business acquisition: finding the right target, valuing it and financing it
By Collaboration Capital · Updated 22 October 2026
The best targets are not for sale. Our semantic analysis identifies the companies that match your acquisition thesis — whether or not they are on the market — and our analysts then qualify each owner's appetite before any approach. Deals of EUR 1
to 200 million, with no imposed exclusivity.
in databases
interested
other buyer
A successful business acquisition is not decided at signing. It is decided three times: when you choose what to look for, when you decide what a target is worth to you, and when you write down what will happen if the accounts presented do not match reality.
This page sets out the complete method: defining an acquisition thesis, accessing the hidden market, assessing a target business line by business line, building a defensible valuation range, structuring the financing and securing the deal legally through to completion.
01 · The thesis
Define your acquisition thesis before looking for a target
The question “which business should I buy?” has no answer until you have answered “why buy rather than build?”. An acquisition costs a premium compared with organic development; that premium is only justified by what you cannot build yourself within an acceptable timeframe.
Five theses underpin almost all acquisitive growth deals. They are not managed in the same way.
Market share, economies of scale, capacity absorption. Fast, measurable gains — but almost always available to other buyers too, and therefore priced in. Heavy integration: this is the thesis with the highest risk of value destruction.
Capturing upstream or downstream margin, securing a critical supply, controlling the channel. Watch out for conflicts: your new supplier's other customers are often your competitors.
An established sales network, local references, a team that knows the market. The easiest thesis to finance, and the one that best tolerates light-touch integration.
A customer qualification, an operating licence, a technology, a technical team. Often the thesis that creates the most value, precisely because what you acquire cannot be rebuilt.
The fifth — diversification into a business unrelated to yours — is the riskiest and the one industrial buyers least often get right. It follows an investor's logic more than an operator's — close to the logic of corporate venturing, where a group takes a minority stake to access an innovation without running it.
The groundwork that saves months
Write your thesis in three sentences before you look at a single target: what you are looking for, why you cannot build it, and how you will recognise a good target. Without this document, every opportunity reviewed will be judged against different criteria — and the first attractive file will carry the decision.
02 · The deal pool
The hidden market: why the best targets are not for sale
Deal databases list two categories of companies: those formally put up for sale, and those that publish their accounts. Together, these two sets miss most of the available pool.
A company formally for sale has three drawbacks for a buyer. It is in competition — the process is designed to push the price up. It is already presented in its best light, by an adviser whose job is precisely that. And the fact that it is for sale is information in itself: someone has decided that now is a good time to sell.
Conversely, an owner who has not started a sale process but receives a serious, confidential approach is in an entirely different position. There is no auction, no imposed timetable and no competitor. What we observe on the deals we run: 10 to 40% of the owners approached say they are open to discussion, and around 90% of them are not in contact with any other buyer.
Why an owner who is not selling still listens
Succession is a latent question. An owner over fifty-five thinks about it without necessarily having taken any steps.
An industrial project is more attractive than an auction. Many sellers care as much about what will happen to their teams as about the price.
A confidential approach costs nothing. Unlike an organised process, it does not expose the company to its customers, employees or banks.
Buying a business off-market offers clear advantages on price and competition, but also specific risks: less prepared information, no structured process, a seller without an adviser. These points are dealt with upstream, through qualification.
In return, this approach demands absolute discretion and serious prior qualification: approaching an owner without having understood their business closes the door for good.
Two blind spots, not one
The distinction matters because each blind spot calls for a different response.
The first blind spot is availability. A company you can identify but which is not for sale: you can see it, and the question is whether its owner is open. It is an approach problem, and it is solved through qualification.
The second blind spot is visibility, and it is much wider. Deal and financial databases capture only around 30% of the companies actually operating in a given market. The main reason is simple: nearly 70% of owners do not publish their accounts, using the confidentiality option available to micro and small companies in France. A company whose accounts are not published is absent from financial databases — whatever its quality, size or relevance to your project.
A second, less well-known cause adds to this: official industry classifications describe companies as they registered themselves, sometimes twenty years ago, not as they operate today. A highly specialised manufacturer of technical parts may be registered under a generic code that says nothing about its real expertise.
What this means in practice
A buyer who relies on databases is working on less than a third of their market. The remaining two thirds are not “hard to reach” — they are invisible. No outreach effort, however rigorous, makes up for an incomplete starting list. This is an identification problem, not a prospecting problem.
03 · The innovation
Our semantic search engine: seeing the invisible 70%
Collaboration Capital has developed its own semantic search engine for acquisition target sourcing. It is not privileged access to a database: it is an identification method that does not depend on any database.
The principle: start from language, not from classification codes
A company describes its business far more precisely on its own website than in its official registration. It names its processes, materials, certifications, markets and references. This vocabulary is specific and discriminating — and above all it is public, whatever the company's policy on publishing its accounts.
Our engine works precisely on this material. Starting from your criteria and the relevant companies you already know, it builds the semantic cluster of your target: the complete language universe that characterises the business you are looking for, with its variants, trade synonyms and the nuances that separate two apparently identical competitors. It then scans the web for every company whose wording matches this cluster.
How this differs from a conventional search
The categories of targets this approach brings to light
Because it depends neither on published accounts nor on industry codes, semantic search surfaces profiles that conventional processes systematically miss:
Independent companies that keep their accounts confidential — often the best-run and most discreet in their sector.
Subsidiaries of groups or conglomerates that could be the subject of a carve-out, and which never appear as stand-alone entities.
Companies in difficulty, in restructuring or in insolvency proceedings, whose acquisition can create a great deal of value.
Companies whose real expertise does not match their industry code — the most frequent case in technical trades.
A multilingual engine by design
The semantic cluster is built in the language of the target market. Looking for a component manufacturer in Germany means working with German technical vocabulary, not an approximate translation of French terms. This is what makes a consistent search across several countries at once possible — and what separates real international coverage from claimed coverage.
An engine, not a spreadsheet
All the information collected feeds your pipeline: stated positions, reasoned refusals, announced sale horizons, qualified contact details. An owner who answers “not for another three years” is not a failure — it is a dated data point that will be worth gold at the right moment. This accumulated knowledge is what distinguishes a sourcing campaign from simple prospecting. Elsewhere we explain what dedicated M&A software brings and the digital tools transforming mergers and acquisitions.
Discover the DEAL Diamond method and how we use AI.04 · Sourcing
From semantic cluster to introduction
The engine produces a list. What turns it into opportunities is entirely human work: validating, understanding, approaching, qualifying. Here is the full process.
Starting from your criteria — business activity, geography, size — and the relevant companies you already know, we formalise the language universe specific to your target: technical vocabulary, product names, sales wording, differences between competitors. It is this cluster, not an industry (NAF) code, that defines the search scope.
The search covers companies' entire online presence, without depending on whether their accounts are published. It therefore captures independent companies as well as group subsidiaries, profitable businesses as well as companies in difficulty or in insolvency proceedings, SMEs as well as mid-sized companies. You validate the list before any action is taken.
For each validated target, we identify the owner and their decision-making circle, then prepare the most suitable form of approach. Your identity remains confidential at this stage.
The conversation with the owner covers their real position: any motivation to sell, the horizon they have in mind, their shareholding structure, financial orders of magnitude. You know the target before you even make contact, and you know whether the conversation has a purpose.
You continue the discussion directly with the interested counterparties, with all the information collected. No exclusivity: you involve your own advisers, and we bring in our network — law firms, accountants, investment funds, lenders — only where you want us to.
The by-product of this method is often as useful as its direct result: at the end of a campaign, you have a 360° map of your market — who is open, who is not, who might be in two years. This information builds up for your next projects and feeds your M&A deal flow over time. Coordination between your internal teams and your advisers during this phase largely sets the pace: teamwork in an M&A deal is not a side issue.
05 · Where we operate
Two configurations: the regional SME and the cross-border deal
We run two types of deal that have almost nothing in common in their execution. Confusing them is a frequent cause of failure: the method that works for buying a family-owned SME fifty kilometres from your site does not work for acquiring a manufacturer in Poland, and vice versa.
Acquiring a French SME
The most common case: a company with EUR 1–20 million in revenue, often family-owned, run by its founder or a long-standing owner.
Its characteristics shape the whole assignment. Its accounts are generally not published — it belongs precisely to the invisible 70%. Its value often rests on its owner, their personal customer relationships and undocumented know-how. It has never considered a structured sale process, and the very idea of being “for sale” is unwelcome.
On these deals, the technical issues come down to three points: normalising EBITDA — owner's remuneration, rent paid to the family property company, personal expenses booked in the business —, key-person dependency and how a handover period neutralises it, and structuring the financing with equity, acquisition debt and often vendor financing.
The cross-border deal
Our network covers 120 countries and our team is multilingual. This is not a nice-to-have: it materially changes results.
An owner approached in their native language replies; approached in English, they reply far less often, and above all less fully. In a first contact where trust is at stake, language is not a logistical detail — it determines the quality of the information obtained and whether the conversation goes any further. It is also why the semantic cluster is built in the language of the target market rather than by translation.
The specific points to watch in an acquisition abroad:
Deal structure. The choice between a share acquisition and an asset acquisition plays out differently under each national law, with major consequences for the liabilities taken over.
Foreign investment screening. Several jurisdictions, including France, require prior approval for certain acquisitions depending on the sector. This formality drives the timetable and must be included as a condition precedent.
Tax structuring. Location of the acquisition holding company, applicable tax treaties, upstreaming of dividends to service the debt: these choices are made before the letter of intent, not after.
Local employment law. Duties to inform or consult employee representatives, transfer of employment contracts, pension obligations: regimes vary widely and weigh on the timetable.
Due diligence. It requires local specialists and central coordination — one of the areas where our network of correspondents steps in directly.
In both cases the principle is the same: no imposed exclusivity, no fixed fees, and you stay in control of the deal. Running an international acquisition ·
Succeeding with an M&A deal abroad.
06 · Assessment
Assessing a target business line by business line
Once several targets have been identified, the question becomes: which one, and why that one rather than another? The usual mistake is to add up synergies. But a synergy has no value in itself — it has value for someone. If three buyers can achieve it, it is priced in and its benefit goes to the seller.
We therefore break each target's value chain down into six to ten business lines, and ask five questions of each:
Each business line gets a score out of 100. What matters is not the average but the concentration of high scores: a target with two business lines above 85 is worth more than a uniformly average one. The first has a core thesis; the second is merely an addition.
This grid produces an immediate operational conclusion: it shows where to focus due diligence, which clauses to include in the letter of intent, and where not to intervene at all during integration. Read the detailed method with a fully worked example · How to assess an acquisition opportunity.
07 · Valuation
Building a defensible valuation range
No method gives “the” price. Three approaches are cross-checked to establish a range, and it is the consistency between them that makes a position tenable in negotiation.
The multiples approach
The most widely used in the SME segment. It applies a multiple to adjusted EBITDA or gross operating profit, calibrated on comparable transactions. In the French SME market, observed multiples most often range from 4 to 8 times EBITDA, with wide variations depending on revenue recurrence, customer concentration, capital intensity and — often the decisive criterion — how dependent the business is on its owner.
The cash-flow approach
Discounting future cash flows (DCF) values the business on what it will generate, not on what others have paid. It is more rigorous but very sensitive to its assumptions: discount rate, terminal growth rate, normalised capital expenditure. It is mainly used to test whether the multiple is plausible.
The asset-based approach
Adjusted net asset value restates assets and liabilities at their real value. Of little relevance to a services company, it becomes central for property-heavy or industrial businesses — and often sets a floor value.
The adjustments that move the price
Before any multiple is applied, EBITDA must be normalised. The usual adjustments: stripping out non-recurring items, normalising the owner's remuneration to a market level, reclassifying leasing as debt, correcting related-party transactions — rent paid to the owner's property company, services invoiced by a holding company. A gap of 15 to 25% between reported and adjusted EBITDA is common, and it feeds straight through to the price via the multiple.
How the cycle affects multiples
Transaction multiples are not stable over time. A downturn compresses them, lengthens processes and shifts bargaining power towards the buyer with cash — the impact of a recession on an M&A deal is worth anticipating, not least because it opens acquisition windows.
08 · Financing
Structuring acquisition finance
Financing is not something you look for after agreeing the price: it determines the price you can offer, and its feasibility must be established before the letter of intent. A buyer whose financing is not lined up loses credibility with the seller at the first precise question.
The equity contribution
In a leveraged structure, lenders generally expect 30 to 50% of the price in equity. This level varies with the predictability of the target's cash flows and the buyer's profile. It can be topped up by minority investors, a fund or quasi-equity.
Acquisition debt
Carried by an acquisition holding company — often an SPV set up to ring-fence the deal risk — and repaid from dividends upstreamed by the target. Lenders calibrate two ratios: leverage — net debt to EBITDA, with a standard covenant around 3.5× — and the DSCR, which measures the ability of cash flows to cover repayments, with a usual floor of 1.10 to 1.20. Understand the ratios a banking syndicate analyses.
LBO, MBO and OBO structures
An LBO is a leveraged acquisition through a holding company. An MBO is the variant led by the existing management team. An OBO allows an owner to sell to a holding company they control themselves, in order to secure part of their wealth while remaining in charge. Structuring acquisition finance.
Vendor financing and earn-outs
Vendor financing — part of the price paid by the buyer on deferred terms — reduces the need for debt and keeps the seller at risk, which reassures lenders about the accuracy of the information provided. An earn-out, or additional consideration linked to future performance, bridges two diverging valuations; however, it shifts risk onto the seller, whose payment will depend on decisions you take.
Public guarantees
Guarantee schemes cover a share of the bank's risk, in the order of 40 to 70% depending on the case. On a tight file, they can tip a credit decision without changing your ratios.
09 · Securing the deal
From letter of intent to completion
The non-disclosure agreement
The first document signed, often treated lightly — wrongly: what really makes an NDA hold comes down to a few specific clauses. The points that matter: the definition of the information covered, the duration of the undertaking, the employee non-solicitation clause, and what happens to documents if talks fail.
The letter of intent
The letter of intent (LOI) sets out the indicative price, the scope, the timetable, the conditions precedent and — the most negotiated point — the exclusivity granted to the buyer during due diligence. It is generally not binding on the final price, but some of its clauses are fully binding: exclusivity, confidentiality, allocation of costs. Securing your negotiations.
Acquisition due diligence
Due diligence is not meant to check everything but to check what could change the decision or the price. It covers several workstreams:
Financial — quality of earnings, normalisation, normalised working capital, real net debt, off-balance-sheet commitments.
Legal — shares and share capital, material contracts, change-of-control clauses, litigation, intellectual property.
Employment — collective agreements, pension obligations, employment tribunal claims, dependency on key people.
Tax — past audits, risky positions, tax consolidation.
Environmental and regulatory — operating permits, environmental liabilities on sites, sector qualifications and their transferability.
This last point is regularly underestimated: some customer qualifications or administrative authorisations do not transfer automatically on a change of control. When they make up most of the value, keeping them must be a condition precedent.
Warranties and indemnities (garantie d'actif et de passif)
The French GAP commits the seller to indemnify the buyer if a liability arising before the sale comes to light afterwards, or if an asset turns out not to exist. Four parameters are negotiated: the cap, the de minimis and the basket threshold, the duration — longer for tax and employment matters —, and the security backing it: an escrow of part of the price, an on-demand bank guarantee or a surety. A warranty without security is worth only what the seller's solvency will be worth on the day you call on it.
Completion
Satisfaction of the conditions precedent, signing of the deeds, transfer of the shares, release of funds, putting bank security in place. The timetable for this day is prepared several weeks in advance.
10 · Timetable
How long does a business acquisition take?
That means six to twelve months in total for a properly run SME acquisition. The phases partly overlap: qualification continues while negotiation starts with the first targets that are open.
11 · After completion
Integration, where the value created is lost
Post-acquisition value destruction rarely comes from a synergy that fails to materialise. It comes from something that used to work and stops working. Four mechanisms keep recurring:
Key people leaving. In an SME, a business line often rests on two or three people who take the customer relationship with them. Retention arrangements are negotiated before completion, not after.
Customers lost through conflicts. A target's customer who competes with one of yours will not stay. This overlap between customer portfolios is checked before the LOI.
Worse terms. A supplier renegotiating at the scale of the new group may withdraw terms the target enjoyed thanks to its long relationship.
Over-integration. Merging too quickly a business whose performance came from its agility destroys precisely what was bought.
The human factor decides more often than the financial one: human relationships in mergers and acquisitions and managing post-acquisition integration deserve as much preparation as due diligence.
The simple rule: only integrate what integration demonstrably improves. Everything else can wait — and often should.
12 · Our deals
Three acquisitions completed with our teams
Lindab · Acquisitive growth
“Any company looking for targets should work with Collaboration Capital.”
Read the Lindab case study ›Groupe Open · Acquisition within weeks
“An excellent relationship (…) they introduced us to a perfect target and after several weeks of discussions we completed the acquisition.”
Read the Groupe Open case study ›Ekpyrosis · Business acquisition
13 · Pitfalls
Six costly mistakes buyers make
Searching before writing your thesis. Without criteria set in advance, the first attractive file carries the decision.
Only looking at businesses for sale. This limits you to the most competitive and most expensive segment of the market.
Adding up synergies without asking who benefits from them. A synergy your competitors can achieve is one you will pay for.
Quantifying the gains but only guessing the risks. The difference in rigour between the two columns of the business plan is the most widespread bias.
Confirming financing after the letter of intent. A buyer whose financing is not lined up loses credibility at the seller's first precise question.
Negotiating the warranty cap without negotiating its security. An unsecured warranty is worth only what the seller's solvency will be worth when you call on it.
14 · Our positioning
Why work with Collaboration Capital
We are an independent advisory firm for acquisition, sale and financing transactions, based in Marseille and working throughout France and internationally through a network covering 120 countries. The firm is registered with ORIAS, the French register of insurance and banking intermediaries, under number 25000696 as a broker in banking transactions and payment services (IOBSP).
No imposed exclusivity. You remain free to consult other advisers and to withdraw the mandate from us at any time.
Structural independence. No bank and no investment fund in our shareholding. We are not paid by any counterparty to the deal.
Access to the hidden market. Semantic analysis identifies targets that databases do not list.
Deals valued at EUR 1–200 million, on both the buy side and the sell side.
Multilingual team — approaching an owner in their own language materially changes response rates on cross-border deals.
15 · Resources
Guides, templates and insights to prepare your acquisition
Our practical guides distil the essentials of a topic into a few pages: method, checklists, points to watch and mistakes to avoid. They can be downloaded free of charge as PDFs.
Guides of direct use to a buyer
Reaching off-market targets: less competition, better terms, and the risks to manage. Download ›
From diagnosis to turnaround plan: buy at the right price without inheriting nasty surprises. Download ›
Drafting a solid LOI: key clauses, legal scope and mistakes to avoid before committing.
Download ›
The non-disclosure agreement template that really protects your data during negotiations.
Download ›
Setting up an SPV to finance an acquisition while ring-fencing the risk: structure, benefits, legal framework. Download ›
How it works, benefits, risks and best practice for structuring secure financing.
Download ›
Our insights on acquisitions and acquisitive growth
Buying a business off-market: benefits, risks and best practice
How to assess an acquisition opportunity
Acquisitive growth for businesses
The LOI in M&A: content and key clauses
Confidentiality and NDAs: what really works
Acquiring a business in difficulty: the method
Successfully integrating an acquisition target
Human relationships in mergers and acquisitions
Succeeding with an M&A deal abroad
Increasing your M&A deal flow
The role of teamwork in an M&A deal
The impact of a recession on an M&A deal
Financing and structuring
Tools and method
Preparing a sale instead? Our resources on selling a business, family succession and the Dutreil pact cover the subject from the seller's side.
16 · FAQ
Your questions about business acquisitions and buyouts
Three routes coexist: deal databases, which only list companies already for sale; intermediaries, who present their mandates; and direct approaches to companies that are not for sale. This third route gives access to a much larger pool, but it means identifying relevant targets without relying on industry codes or published accounts, then qualifying each owner's appetite before any approach.
An off-market company is not formally for sale and is not in contact with any buyer. The approach is made directly to the owner. The advantage is twofold: access to targets your competitors cannot see, and no organised competitive process — so no auction pushing up the price.
The price is generally based on a multiple of adjusted EBITDA. In the French SME market, observed multiples most often range from 4 to 8 times EBITDA depending on the sector, size, revenue recurrence and dependency on the owner. On top of the price come due diligence costs, legal fees and the cost of putting the financing in place.
Six to twelve months from the start of the search to completion for an SME deal. Identifying and qualifying targets takes two to four months, negotiation and the letter of intent one to two months, due diligence and legal documentation three to five months. A shorter timetable is possible when the target has already been identified.
In a leveraged structure, lenders generally require an equity contribution of 30 to 50% of the purchase price. This level varies with the predictability of the target's cash flows, the quality of the buyer and market conditions. Vendor financing and public guarantees can reduce the equity needed but do not replace it entirely.
The garantie d'actif et de passif commits the seller to indemnify the buyer if a liability arising before the sale comes to light afterwards, or if an asset turns out not to exist or to be overvalued. Its parameters are negotiated: cap, de minimis, duration by type of risk, and the security backing it — escrow, on-demand bank guarantee or surety.
It is not compulsory, but most mandates on the market include an exclusivity clause that prevents the buyer from consulting another adviser for its duration. We do not ask for exclusivity: you remain free to consult other advisers and to withdraw the mandate from us at any time.
Organic growth relies on developing your own resources: hiring, investment, winning new customers. Acquisitive growth means buying an existing business to gain immediate access to market share, a capability, a local presence or a qualification. It is faster and more expensive, and it brings an integration risk.
Because they capture only around 30% of the companies in a given market. Nearly 70% of owners do not publish their accounts, using the confidentiality option available to small companies: these businesses are absent from financial databases whatever their quality. On top of this, industry codes are imprecise: they describe companies as they registered, not as they operate. A semantic search based on the vocabulary companies actually use has neither of these limitations.
Yes, and these deals considerably widen the pool of targets. However, they require four points to be anticipated: the legal structure of the acquisition, which differs under each national law; whether prior approval is needed under foreign investment screening; the tax structure and the upstreaming of dividends to service the debt; and local employment law. Approaching owners in their native language materially improves response rates. Allow nine to eighteen months depending on the jurisdiction.
Yes, and acquiring a business in difficulty can create a great deal of value. However, these deals follow their own timetable and legal framework — safeguard proceedings, receivership, court-approved sale — with tight deadlines and often incomplete information. The acquisition structure and the treatment of employee liabilities are the two decisive points.
Not necessarily. A majority acquisition combined with a shareholders' agreement keeps the seller or the management team as shareholders during a transition period, which secures the handover of customer relationships and aligns interests. The agreement must then cover governance, exit clauses and the mechanism for buying the remaining shares.
The orders of magnitude on this page reflect practices observed on the market and our own deals. They are neither personalised advice nor a commitment on the terms of any deal. Each case is assessed on its own merits.
Key figures
On this page
Our commitment
Off-market target identification through semantic analysis
No exclusivity, no fixed fees
IOBSP broker — ORIAS no. 25000696
A first confidential 30-minute conversation to scope your acquisitive growth project.
A first 30-minute conversation with a partner to frame your acquisition thesis and define the search scope — with no commitment.
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Further reading
The five-question grid, the aggregate score and a fully worked example.
Running a series of acquisitions rather than a one-off deal.
Acquiring internationally: legal, tax and cultural differences.