From the perspective of an active buyer in the Spanish middle market, we explain the real criteria that determine whether a company is attractive for acquisition and which factors weigh most in the decision.
After more than fifteen years and hundreds of companies analysed, the criteria that guide our investment decisions at Blue Mountain have become clear — not from theory, but from the accumulated experience of what works and what does not.
When we evaluate an acquisition opportunity, we are not looking at a financial model. We are looking at a business — with people, customers, competitors, risks, and potential. Here is what we actually look for.
This is the single most important factor. A great business with a weak team is a declining business. A good business with a strong team is a growing one. We look for competence, integrity, motivation, and — critically — the ability to operate independently of the founder.
If the founder is the company’s sole commercial relationship, chief engineer, and head of finance, the company is a key-person risk — and we price accordingly. If the founder has built a team that can run the business without them, the company is institutionalised — and worth materially more.
Not all revenue is equal. We prefer recurring, contractual revenue over project-based or one-off sales. We prefer diversified customer bases over concentrated ones. We prefer growing revenues over stable ones, and stable over declining.
The question we always ask is: “If we lost the three largest customers, what would happen to the company?” If the answer is catastrophic, the revenue is too concentrated.
We look for companies that have something defensible: a brand, a technical capability, a regulatory licence, a geographic stronghold, a customer relationship depth, or a cost advantage. Companies in commoditised markets competing solely on price are less attractive, because their margins are perpetually under pressure.
The sector must have sound long-term fundamentals. We prefer sectors with structural growth drivers (demographic, regulatory, technological), reasonable fragmentation (consolidation opportunity), and manageable cyclicality.
Companies with clean, well-documented financials make better acquisition candidates — not because the numbers are necessarily better, but because transparency reduces uncertainty. Uncertainty increases risk. Risk reduces value.
We are not looking for companies at the end of their growth runway. We want businesses that have headroom to grow — through geographic expansion, product line extension, customer acquisition, or operational improvement. The growth does not have to be explosive; it has to be credible.
In the middle market, cultural alignment between buyer and seller matters more than in large corporate transactions. We look for companies whose values, work ethic, and approach to business are compatible with ours. Cultural misalignment post-acquisition is one of the most common — and most destructive — sources of value destruction.
Ultimately, what we are looking for is simple: a good business, with a good team, in a good market, at a fair price. The specifics vary, but these four pillars are consistent across every investment decision we make. Business owners who understand what buyers look for — and who prepare their companies accordingly — consistently achieve better outcomes.
Founder of Blue Mountain
Over 15 years investing in Spanish companies with patient capital. Expert in business succession, corporate governance, and middle-market investment.
By Blue Mountain Capital
By Dirk Manuel Martens Jiménez
By Dirk Manuel Martens Jiménez
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