If a buyer approaches 100 logical targets, what is the expected number of offers they can make?

When considering the expected number of offers a buyer might make after approaching 100 logical targets, it's important to understand typical industry practices regarding how many targets a buyer ends up pursuing actively.

The correct response indicates that, on average, a buyer might expect to extend offers to approximately 2 targets. This is aligned with the realities of mergers and acquisitions, where the buyer must carefully evaluate each potential target. Factors such as strategic fit, financial considerations, and negotiation dynamics come into play, leading buyers to narrow down their focus significantly from the original list of candidates.

In many M&A scenarios, the initial list of potential targets can be quite extensive, but as the buyer engages in due diligence, some targets might fall off due to complications, lack of interest, differing valuations, or simply finding more suitable alternatives. Thus, it’s typical for only a small fraction of approached companies to move forward to the offer stage.

This pattern explains why extending offers to just a couple of targets out of a hundred logical candidates is consistent with industry standards, emphasizing the selective nature of deal-making in mergers and acquisitions.