When you receive interest from a prospective buyer, the marketing materials will say all the right things. The questions you ask — and the answers you receive — will tell you considerably more.
Here are the questions worth putting to any buyer, whether they are a private equity firm, a strategic acquirer, or a holding company.
Do you have a mandatory exit horizon?
PE firms raise capital from institutional investors on a defined timeline — typically ten years. That structure requires liquidity events. When a PE firm acquires your business, it is planning a five-to-seven-year hold, not a permanent one. This creates pressure that has nothing to do with the quality of the firm's people — the clock is built into the fund documents. Ask directly. Get a direct answer.
Have you sold any portfolio companies, and why?
If a buyer describes themselves as a long-term or permanent holder but has sold assets, understand the circumstances. The track record is more informative than the positioning.
How is your team compensated?
A team compensated primarily on IRR over a defined period has different incentives than one compensated on long-term portfolio performance. Incentives drive behaviour. The structure of compensation tells you what the buyer is actually optimising for.
What does your capital structure look like?
Who are the investors? What are the liquidity provisions in the fund documents? The answers will tell you whether "permanent capital" is a genuine structural reality or a marketing phrase.
Can I speak with founders of businesses you have held for five or more years?
Their experience will tell you more than any pitch deck. Ask specifically about what changed after close — management, culture, compensation. The things that were promised, and the things that were actually delivered.
What the answers reveal
The right buyer depends on your priorities. If your primary goal is maximising price, some of these questions matter less. But if you care about your team's future, the culture you built, and whether the business will still be recognisably itself in twenty years — these are the most important questions in the process.
A buyer with a five-year clock will make different decisions than one without any clock at all. That difference is structural, not personal, and it shows up in every operational decision made after close.
At Enduring Ventures, we encourage every founder we speak with to apply the same rigour to us — and to anyone else they are considering.
— Lucien Ong, Co-Founder, Enduring Ventures