Buying a Business In Singapore - The Old Bird vs The Idealist

Mac
1 day ago
8 min read

In Singapore, the Mergers and Acquisitions (M&A) scene for Small and Medium Enterprises (SMEs) is getting more limelight. Whether it’s a serial entrepreneur looking for their next acquisition or a corporate professional seeking to buy their way into entrepreneurship through acquisition (ETA), the influx of buyers is starting to create an impact.

However, for a business owner looking to exit, not all buyers are created equal. At Fey Day, we often see a recurring theme: more than 80% of the buyers are coming in empty handed after 2 or more years of searches. Why? The success of a transaction is rarely determined by the price on the term sheet alone. Instead, it is determined by the type of acquirer sitting across the table.

Broadly speaking, the market is divided into two camps: The Old Bird (Experienced Acquirer) and The Idealist (First-Time Acquirer). Understanding the DNA of these two personas is essential for sellers to protect their legacy and for buyers to understand how they can improve their chances of closing a deal.

In this guide, we go behind the scenes of the M&A process to compare these two archetypes.

1. The Initial Engagement: Profile and Transparency

The journey begins with the first point of contact. How a buyer presents themselves sets the tone for the entire relationship.

The Old Bird: Open Books, Open Mind

The Experienced Acquirer understands that trust is the currency of M&A. They are typically very willing to share their background, their previous acquisition track record, and their professional profile right from the start. They know that a seller is not just looking for a check; they are looking for a capable successor. By being transparent, the "The Old Bird" builds immediate rapport.

The Idealist: The "Paranoid" Approach

In contrast, first-time acquirers tend to be skittish. They often operate with a degree of paranoia, fearing that if they reveal too much about themselves—or even their interest in the business—someone might "steal" the deal or use the information against them. This defensive posture can often alienate sellers who are looking for a human connection and a sense of security.

Pro Tip: For sellers, transparency is a green flag. If a buyer is hesitant to share who they are, things are likely to fall apart when it comes to the "hard" parts of the deal, like financing, deal structure and legalities.

2. Sourcing Strategy: Where Do They Find Deals?

The way a buyer finds a business often dictates how they value it.

The Old Bird: The Power of the Network

Experienced acquirers don't wait for a business to appear on a public marketplace. They rely on deep-rooted relationships with Singapore business broker like Fey Day and their own private networks. This allows them to get "off-market" calls first. They understand that the best deals are often those that haven't been picked over by the masses.

The Idealist: The Marketplace Hunter

First-timers often start their journey on public marketplaces or by utilising cold email campaigns. While there is nothing inherently wrong with this, it often leads to a "quantity over quality" mindset. They end up competing with dozens of other buyers, which can lead to "buyer fatigue" and a lower success rate in actually securing an exclusive conversation.

3. Target Market: Laser Focus vs. Industry Agnostic

The Old Bird: The Specialist

An experienced buyer is usually highly specific. They know exactly which sectors they want—whether it’s Engineering, CSP (Corporate Service Providers), Education, Consumer Services or Tech. They look for "bolt-on" acquisitions that can create synergies with their existing portfolio. Because they know the industry, they can spot value and risks that others might miss.

The Idealist: The Generalist

First-time buyers are generally industry agnostic. They approach the market from a broad "B2B or B2C" angle. While being open-minded sounds like an advantage, in M&A, it often leads to "analysis paralysis." Without a deep understanding of a specific sector, the Idealist struggles to quantify risk, leading to hesitation when it's time to pull the trigger.

4. Communication Style: Operator vs. VIP

The way a buyer talks to a business owner can make or break the chemistry of a deal.

The Old Bird: The Operator’s Perspective

When an experienced buyer speaks to an owner, they speak the same language. They talk about operations, supply chains, customer retention, and staff culture. They approach the conversation as a peer, showing respect for what the owner has built.

The Idealist: The "VIP" Syndrome

First-time buyers, especially those coming from high-level corporate backgrounds, sometimes inadvertently adopt a "top-down" approach. They may behave like a VIP or a consultant, auditing the business rather than trying to understand it. This can be a major turn-off for SME owners who have poured their lives into their companies and want to be treated with respect, not just scrutinised like a line item.

5. The Legal Hurdle: The NDA Process

The Non-Disclosure Agreement (NDA) is the first legal test of any deal.

The Old Bird: They sign off quickly. They know that an NDA is a standard industry protection and they don't want to waste time on "pre-deal" legalities.

The Idealist: They tend to negotiate the NDA. They may request rewording or bring in lawyers before they’ve even seen a single financial statement. This often signals to the seller that the buyer will be "high maintenance" throughout the M&A process.

6. Deal Qualification: High-Level vs. The Weeds

How does a buyer decide if a business is worth their time?

The Old Bird: The Big Picture

The Pro understands the business from a "big picture" perspective first. They look at high-level financials, market positioning, and the strength of the management team. If the fundamentals are strong, they move forward. They don't sweat the small stuff until they are deeper into due diligence.

The Idealist: Zooming in Too Fast

The Idealist tends to zoom right into the minute details "off the bat." They might ask about a specific utility bill or a minor expense from three years ago before they even understand the company’s primary revenue drivers. This "missing the forest for the trees" approach slows down the momentum and can frustrate sellers who feel the buyer is focused on the wrong things.

7. Financing and Deal Structure

This is where the men are separated from the boys—and where most deals die.

The Old Bird: Cash is King

Experienced acquirers are versatile. They are often willing and able to pay up to 80% cash up front for the first tranche of the acquisition. They have their "Proof of Funds" ready and pre-vetted banking facilities. In many cases, they can get financing approved within a mere two weeks because they have existing relationships with lenders and investors who trust their track record.

The Idealist: The "Seller Financing" Trap

First-time acquirers often look for deals where the owner offers massive seller financing (70% or more). While seller financing is a common tool, relying on it too heavily suggests a lack of capital or confidence. Furthermore, many Idealists are still "discussing" things with investors or exploring personal loans while the deal is active. As a result, deals often stall at the financing stage and subsequently die off.

Pro Tip: Secure your financing first before sourcing for deals.

8. Speed of Execution: Urgency vs. Delay

Time kills all deals. In the world of M&A, momentum is everything.

The Old Bird: From the first meeting to a signed Sales Purchase Agreement (SPA), the process typically takes 4 – 5 months. They approach the deal with urgency because they know that every day a business is "under offer" is a day of uncertainty for the staff and operations.

The Idealist: Every phase of the M&A process tends to be long-drawn and delayed. Whether it's waiting for a lawyer's feedback or "sleeping on" a decision, the Idealist’s lack of experience leads to a slow pace that often results in "deal fatigue" for the seller.

Pro Tip: As a buyer, once you build yourself a reputation as an indecisive acquirer, eventually other M&A advisor or business broker will be hesitant in dealing with you.

9. Negotiation Style: Realistic vs. Complex

The Old Bird: Commercially Realistic

A Pro knows that a deal has to work for both sides. They are commercially realistic. They have a "ceiling" price in mind, and if the deal exceeds that, they will simply walk away without drama. They use tools like earn-outs and seller financing to bridge valuation gaps, rather than just arguing over the headline price.

The Idealist: Over-Negotiating

First-timers often over-negotiate on price. They may come up with incredibly complex deal structures to try and "win" the negotiation, often ignoring the importance of favourable terms or the goodwill of the seller. This can lead to a contentious relationship that makes the post-acquisition transition period incredibly difficult.

Pro Tip: Be frank and work closely with the business broker / M&A advisor. They will have a good idea what is workable for both parties.

10. Risk Management: Calculated vs. Avoidance

The Old Bird: Taking Calculated Risks

The experienced buyer is willing to compromise. They adopt a risk management approach. They know that no business is perfect and are willing to take on calculated risks if the upside is significant. They focus on how to mitigate the risk after they take over.

The Idealist: Waiting for the Unicorn

The Idealist often adopts a risk avoidance approach. They will walk away from a "B+" business because they are waiting for an "A+" deal that may not actually exist in the lower market. By seeking perfection, they often end up buying nothing at all.

Pro Tip: If you are a first time buyer, it make sense to seek an entrepreneur or an experienced M&A professional for advice.

Advice for First-Time Buyers: How to Increase Your Odds Of Buying a Business in Singapore.

If you are looking for your first acquisition, you can significantly increase your chances of success by adopting these practice:

Get your financing in order FIRST. Don't go shopping with an empty wallet.
Narrow your focus. Choose 1-2 related industries and learn them inside out.
Communicate as a partner. Show the owner that you care about their legacy, not just their EBITDA.
Move with speed. Once you've done your initial due diligence, make a decision.

Read Next Article: Understanding Common Terminology in M&A Transactions

Why Fey Day?

At Fey Day, we act as the vital bridge between these two worlds. For sellers, we serve as a rigorous filter, vetting buyers to ensure that you aren't wasting time with "Idealists" who lack the funds or the mindset to close. For buyers, we provide the professional framework and guidance needed to navigate a deal with the efficiency.

Selling or buying a business is one of the most significant financial and emotional events in a person’s life. In this complex market, having an expert who understands the nuances of acquirer psychology is not just an advantage—it’s a necessity.

Ready to start your M&A journey? Whether you are looking to exit your business or acquire your next venture, partner with Fey Day. We bring expertise, integrity, and a track record of results to every transaction.

Visit us at www.feyday.com to learn more about our services and how we can help you achieve your business goals.