Most owners who want to buy a business can describe it in a sentence. "A competitor in the Midlands." "Something that gets us into maintenance." That is an ambition. It is a good start, but it is not yet something you can search with, or something that will stop you buying the wrong business when an attractive one turns up.
An acquisition thesis is the next step: a short written statement of what you want to buy and why. It connects the growth you want to the kind of business that would deliver it, what you can afford, and how you will make the business better once you own it. In practice it becomes your brief, for yourself, your board, your bank and anyone helping you search.
It matters. In a Bain survey of 250 executives involved in acquisitions, only 29% had an investment thesis that stood the test of time, and more than 40% had none at all (Bain, 2005). Those were large companies, but the lesson travels: without a clear reason for buying, it is hard to judge any deal.
What is the difference between an ambition and a usable thesis?
A usable thesis can say no. Compare these two.
Ambition: "We want to grow through acquisition in fire and security, ideally in new regions."
Usable thesis: "We want to buy one or two fire and security maintenance businesses in the Midlands, with £2m–£8m turnover, so we can serve our national customers there with our own engineers. They must have a recurring maintenance book and recognised accreditation. We will not buy a business where one customer is more than a quarter of sales, or where the owner is the only person who can run it. We expect to fund the first deal from cash and bank debt, and we will not pay more than we have agreed as a board."
The second version tells a researcher which businesses to include, tells you which ones to drop early, and tells an owner why you might be a good home for their business.
What goes into an acquisition thesis?
A thesis that works covers six areas.
- Rationale. Why buy rather than grow on your own? What should the acquisition do for your business in three to five years: new customers, new regions, a capability, scale, or a stronger team?
- Capabilities. What the business must bring that you do not have, and what you bring to it. This is where the value after completion comes from, so be honest about both sides.
- Target characteristics. Sector and activity, size as a range, ownership, customers, and the depth of management below the owner.
- Geography. Where you want to be, where you already are, and anywhere you will not go.
- Funding assumptions. Roughly how much you can spend, and from where: cash, bank debt, or paying some of the price in stages. Our guide to funding an acquisition covers the options. Include the most you will pay and how you will measure it.
- Exclusions. The deal-breakers. Three to five things that end the conversation, however good the rest looks.
A worked example
The business, figures and assumptions below are fictional and illustrative. They show how a thesis fits together, not what any real business should do.
The buyer: a family-owned fire and security group in the North of England. Turnover £22m, operating profit about £2.2m. Twenty years old. Organic growth has slowed to low single digits. Several national customers want one supplier across the UK, and the group has no engineers in the Midlands.
Assumptions: - The board can commit around £1.5m of cash, and the bank has indicated support for a deal of up to about £5m in total, subject to the usual checks. - The finance director can give the search one day a week; the founder, half a day. - For context only: advisers reported an average price of 5.4 times EBITDA (operating profit) across UK and Irish mid-market deals in the second half of 2025 (Dealsuite). That average spans many sectors and sizes, so the board sets its own ceiling from its own sums.
The thesis, completed:
| Area | Entry |
|---|---|
| Rationale | Serve national customers in the Midlands with our own engineers, and add a recurring maintenance book that lifts the share of predictable revenue |
| What they bring | Engineers, customer relationships and accreditation in a region where we have none |
| What we bring | National contracts to feed them, buying power, systems, a route forward for the owner's staff |
| Sector and activity | In: fire alarm, emergency lighting and security maintenance for commercial, education and healthcare buildings. Out: install-only contractors with no maintenance book; specialist marine work |
| Size | Turnover £2m–£8m; operating profit £0.3m–£1.2m after a fair salary for the owner |
| Geography | East and West Midlands. Not the North (already covered) or London |
| Ownership | Founder- or family-owned, ideally an owner thinking about retirement or succession. Not owned by private equity or a larger group |
| Customers | No customer above 15% of revenue; top five below 40% |
| Management | An operations manager or senior engineer who runs the business day to day; owner willing to stay 12–24 months |
| Must-haves | 60%+ recurring maintenance revenue; recognised third-party accreditation; clean health and safety record |
| Deal-breakers | Open regulatory or safety investigations; one customer above 25%; heavy reliance on subcontracted engineers; accounts the owner cannot explain |
| Funding and price | Cash and bank debt, with part of the price paid in stages. A board-agreed maximum multiple of real profit, set before any owner is met |
| Timing and capacity | First deal completed within 12–18 months; no more than one integration running at a time |
Notice that every line can rule a business out. "A good-quality business" is not a criterion. "60%+ recurring maintenance revenue" is.
Acquisition thesis template
Copy this into a document and fill it in. One page is the goal. Use ranges rather than single numbers.
| Area | Question to answer | Your entry |
|---|---|---|
| Rationale | Why buy rather than grow organically? What should this deal do for us in three to five years? | |
| What they bring | Which capability, customers, region or people must the business add? | |
| What we bring | Why would we be a good owner? What makes the business better with us? | |
| Sector and activity | What is in, and what is specifically out? | |
| Size | Turnover range; profit range after a fair owner's salary | |
| Geography | Regions in scope; regions out of scope | |
| Ownership | Who do we expect to be selling, and why now? | |
| Customers | Customer types; the most any one customer can be | |
| Management | Who must be in place below the owner? How long should the owner stay? | |
| Must-haves | Three to five things without which we walk away | |
| Deal-breakers | Three to five automatic no's | |
| Funding | How much from cash, debt or staged payments? Has the bank seen it? | |
| Price ceiling | The most we will pay, and how we measure it | |
| Timing and capacity | When we want to complete; who runs the search; who leads integration | |
| Sign-off | Who has agreed this thesis, and when we will review it |
How to use it
- Start with the rationale. If you cannot write two or three sentences, stop there and work on that first. Every other line should follow from it.
- Keep the lists short. Ten must-haves describe a business that does not exist.
- Set the price ceiling now. Decide the most you will pay before you meet an owner you like. Our guide to valuing a business before buying explains how.
- Test it on real companies. Score ten businesses you already know. If none pass, it is too tight. If all pass, it is too loose.
- Share a short version. Give a trimmed copy, without your price ceiling, to your accountant, bank and any advisers.
- Review it every quarter. Write down what you changed and why.
How do you challenge your thesis?
A thesis is only useful if it survives contact with the market. Before you start a search, test it on three fronts.
Evidence. What would you need to see to believe the rationale? If the case rests on national customers wanting regional coverage, have you asked them? If it rests on cross-selling, how much of your current customer base would actually buy the new service? Write down the two or three facts that must be true, and how you will check them.
Disqualifying factors. Imagine the deal has gone wrong two years after completion. What is the most likely reason? Key engineers left. The biggest customer moved. The owner was the business. Each answer should appear somewhere in your deal-breakers or in the questions you plan to ask. Our guide to why acquisitions fail covers the common causes.
Management capacity. Who will run the search, the deal and the integration, and what stops while they do? An acquisition takes real management time, usually from the same two or three people who already run the business. If no one has the hours, the thesis needs to say how that gap will be filled. Our guide to management time in an acquisition sets out what to expect.
Will a clear thesis make you miss good opportunities?
It is a fair worry. The answer is that a thesis guides your attention; it does not forbid you from looking. If an unexpected business turns up, you can still consider it. The difference is that you decide deliberately to change the brief, with your board, rather than drifting into a deal because it was available.
Most buyers find the opposite problem. Without a thesis, they look at too many businesses, take too long on each, and find a reason to pay more for the one they like.
Your next step
If you want to check how ready you are before writing a thesis, our acquisition readiness planner is a quick place to start. And if you would like to talk your draft through with someone who has bought businesses, book an Expansion Briefing: a free 30-minute call with us about what you want to buy and whether acquisition makes sense now, followed by a short written summary and a recommended next step.
Questions buyers ask
What should an acquisition thesis include?
Why you are buying, what the business must add, the size and type of business you want, where it is, who owns it, how you expect to fund it, the most you will pay, what would rule a business out, and who has the time to run the search and the integration.
Will a narrow thesis make me miss good opportunities?
It can, if every line is a single number. Use ranges, keep must-haves and deal-breakers to three to five each, and review the thesis as you learn. A clear thesis does not stop you looking at an unexpected business; it makes you decide deliberately whether to change the brief.
How much detail do I need before starting a search?
Enough to tell a researcher which businesses to include and exclude, and enough to tell an owner why you would be a good home for their business. One page is usually right. If you cannot say why you are buying in two or three sentences, start there.
Should I share my acquisition thesis with business owners?
Share a short version with advisers, your bank and your accountant so they can bring you relevant businesses. With owners, talk about why you would be a good home for their business rather than reading out your criteria, and keep your maximum price to yourself.
When should I write it?
Before you approach any business. Once you have met an owner you like, it is much harder to be objective about what you need and what you will pay.
Michael Ferguson is the founder of Acquisitiv and a Partner at CDI Global in the United Kingdom. A chartered certified accountant (ACCA), he was head of M&A at a global, family-owned spirits group and finance director at a FTSE-listed company. He acts only for buyers. More about Michael →