Field guide · Proprietary search

Acquisition thesis criteria: a working template

Acquisition thesis criteria are the rules a buyer uses to decide which companies belong in a search, which should be rejected, and which need more evidence. A usable set of criteria does more than describe the ideal company. It tells a researcher how to handle each company consistently before outreach begins.

The practical format is simple. For every material criterion, write:

1. the condition that passes;
2. the condition that rejects;
3. the evidence strong enough to support either decision; and
4. what happens when the fact cannot be known from available sources.

That fourth line matters. Private-company research produces unknowns. A thesis that has no instruction for them quietly turns guesses into facts.

This template is for acquisition teams that need to convert an investment idea into a repeatable target search: independent sponsors, search funds, family offices, lean private-equity teams, and corporate-development operators inside PE-backed companies. It is not an investment-committee memo, a valuation model, or a diligence checklist. It is the decision contract that sits before those things.

The acquisition criteria template in one table

Start here. Do not start with a database query.

The examples are deliberately ordinary. If the rules are not clear on an ordinary company, they will not become clearer when a complicated target appears.

1. Begin with the acquisition objective

A list of desirable company traits is not yet an acquisition thesis. The team first needs to state what buying a company is supposed to accomplish.

An independent sponsor might want a durable platform in a fragmented service market. A search fund may be looking for one company the searcher can operate for the long term. A PE-backed operating company may want a capability, geography, customer relationship, or local branch density that strengthens the existing platform. Those are different objectives. They should not produce the same target criteria.

Write the objective as a decision, not a slogan:

Acquire a company that adds a recurring commercial-service capability in the Mid-

Atlantic and can operate inside the existing branch network.

Now ask what would make that objective false. If the target is mainly residential, if the work is mostly one-time installation, or if its service footprint cannot overlap the platform, the target may not support the stated outcome. Those contradictions become candidate exclusion rules.

The objective should be narrow enough to guide research but not so elaborate that it pretends public information can settle the deal. The Stanford Graduate School of Business describes a search fund as a vehicle through which an entrepreneur seeks, acquires, manages, and grows a privately held company. Its current Search Fund Primer provides broad operating context for that model. The criteria contract here has a smaller job: decide which businesses deserve the next unit of search effort.

2. Turn each thesis phrase into a testable rule

“Founder-owned industrial services in the Southeast” sounds specific until two people apply it.

What counts as industrial service? Does distribution qualify? Which states define the Southeast? Is a company founder-owned when the founder remains CEO after selling a majority stake? What source is strong enough to settle ownership? If the answer is not public, does the record advance, stop, or become a question for a conversation?

Break the sentence apart. Industry, service model, customer base, geography, ownership, scale, and operating fit each need their own rule. Use this structure:

Criterion name

• Intent: Why the criterion matters to the acquisition objective.
• Pass: The observable condition that satisfies it.
• Reject: The confirmed condition that disqualifies it.
• Evidence: The sources, dates, and evidence strength required.
• Unknown: The next action when the available record cannot decide.
• Owner: Who may approve the decision or an exception.

One criterion might read:

Commercial service mix

• Intent: The buyer wants a base of repeat field-service work rather than project-

only installation.

• Pass: Direct company material or another current source supports recurring

inspection, maintenance, or contracted service for commercial customers.

• Reject: Current evidence confirms residential-only work, product-only

distribution, or project work without a service operation.

• Evidence: A current service description plus one corroborating source where the

distinction remains ambiguous.

• Unknown: Hold for one bounded research step; if still unresolved, preserve the

issue as a qualification question rather than assigning a pass.

• Owner: The mandate owner approves any exception.

The same structure works for geography, ownership, end market, scale, certification, customer concentration, or a strategic capability. The evidence will change. The decision grammar should not.

3. Separate hard gates from ranking factors

Teams often mix requirements and preferences inside one score. That makes a high total capable of rescuing a company that fails the thesis.

Use three classes instead:

Weights belong only on ranking factors. A confirmed exclusion should not become “minus 20 points.” It should reject the target under the current thesis version. A required criterion that remains unknown should route to the named unknown action. It should not receive half credit because the list needs more green rows.

This also makes exceptions reviewable. If a deal lead wants to advance a company that fails a hard rule, record the exception, who approved it, and why. Do not weaken the rule invisibly for one attractive company.

4. Define evidence before research begins

Acquisition criteria fail when the field names look precise but the proof standard is undefined. “Family-owned” can come from a company history page, a transaction announcement, a state filing, a data-provider field, or an analyst inference. Those are not equivalent.

For every material criterion, name the acceptable evidence classes:

• Confirmed: an authoritative or direct source states the fact.
• Supported: multiple credible sources point to the same conclusion.
• Inferred: a proxy suggests the fact but does not establish it.
• Unknown: the bounded search did not produce defensible evidence.

Then add freshness. A company’s headquarters may be fairly stable. Ownership, executive roles, active licenses, and transaction status can change quickly. The evidence record should carry the source URL, observation date, relevant fact, strength, and the date or condition that triggers another check.

Public sources have specific jobs. The U.S. Census Bureau’s County Business Patterns can help frame establishments by geography, industry, and employment-size class. The SBA table of size standards shows why “small business” is not a universal revenue or employee threshold, although its regulatory definitions should not be copied into an investment mandate. The SEC’s EDGAR APIs provide structured submissions and company facts for public issuers. None of these is a complete private-company market.

That limitation is useful. It keeps a source from being asked to prove something it cannot observe.

5. Test the criteria against a small market sample

Before applying the thesis to thousands of businesses, test it against a deliberately mixed sample of 15 to 25 companies:

• obvious fits;
• obvious exclusions;
• borderline business models;
• companies with thin public records;
• known subsidiaries or prior names;
• a business the team already understands well; and
• at least one company that looks attractive but should fail a hard rule.

The sample is not for measuring conversion. It is for exposing ambiguity. Have two reviewers apply the criteria independently, then compare where they disagree.

If both reviewers reach different decisions from the same evidence, the rule needs work. If most records stop at the same unknown, the thesis may depend on a fact public research cannot reliably establish. That does not mean the criterion is wrong. It means its unknown action and later qualification question need to be explicit.

KPMG’s published typical acquisition process separates market analysis, target identification, pre-selection, contact, and confirmation of transaction interest. The criteria test should respect those stages. Do not force a research record to answer a seller-interest question that belongs after contact.

6. Make scale criteria honest for private companies

Revenue and EBITDA ranges are common acquisition criteria. They are also among the facts least likely to be verified from public material for a private company.

Keep three things separate:

1. the economic range the mandate actually requires;
2. the public proxies available for ordering research; and
3. the direct evidence required before a transaction decision.

Employee count, facility footprint, fleet size, contract awards, license class, or a provider estimate may help prioritize. Label the result as supported or inferred based on the source. Do not turn a proxy into “$4.2 million EBITDA” because a scoring model needs a number.

A workable rule might say:

• pass when reliable direct evidence places the company inside the range;
• reject when reliable evidence places it clearly outside;
• use named proxies only to rank further research; and
• preserve the financial range as unknown until direct information becomes available.

This produces fewer false decisions. It also gives an outreach conversation a useful question instead of a fabricated answer.

7. Version the criteria and preserve prior decisions

A search should learn. It should not quietly rewrite its history.

Give the acquisition criteria a version and approval date. Every company decision should point to the version used. When a rule changes, record:

• the old and new text;
• the evidence or conversation that caused the change;
• who approved it;
• the effective time; and
• which accepted, rejected, and unresolved companies require another review.

Do not delete the old rejection reason. A target rejected under thesis v1 may advance under v2 without either decision being wrong. The rule changed.

This is also where the criteria connect to a durable acquisition target list. The list should carry criterion-level pass, reject, and unknown states; source evidence; the reviewer decision; and the exact thesis version. Otherwise a refreshed list can no longer explain why yesterday’s target disappeared or today’s target appeared.

Copyable acquisition thesis criteria worksheet

Use one block for the mandate and one block for each material criterion.

Mandate

• Acquisition objective:
• Buyer and operating context:
• Industry and business-model scope:
• Geography:
• Economic range:
• Ownership constraints:
• Required capabilities:
• Named exclusions:
• Review owner:
• Thesis version and approval date:

Criterion

• Name:
• Why it matters:
• Hard inclusion, hard exclusion, or ranking factor:
• Pass rule:
• Reject rule:
• Acceptable evidence:
• Freshness rule:
• Unknown action:
• Exception owner:

Market and review controls

• Market cells to cover:
• Primary and challenge source for each cell:
• Known source omissions:
• Small-sample test set:
• Disagreement found during testing:
• Rule change required:
• Records requiring re-review after a change:

The worksheet is short on purpose. The detail belongs in the evidence attached to each company, not in more adjectives inside the thesis.

A worked example

Consider a hypothetical PE-backed commercial-services platform looking for add-on acquisitions in two neighboring states.

The first draft says: “Acquire high-quality local providers with recurring revenue and strong technicians.” It cannot be researched consistently. “High-quality,” “local,” “recurring,” and “strong” have no shared decision rule.

A better criteria contract could say:

• Business model — hard inclusion: provides inspection, preventive maintenance, or

repair directly to commercial facilities. Reject residential-only and product-only companies. Hold mixed models for a service-mix check.

• Geography — hard inclusion: has a verified operating location or current service

footprint in one of eight named counties. Do not infer footprint from an area code.

• Revenue model — required, unknown allowed: current direct material supports a

contracted or repeat service offering. If the revenue mix is unavailable, preserve a qualification question.

• Technician base — ranking factor: current hiring, license, location, or company

evidence supports an active field workforce. Do not infer an exact headcount from one directory.

• Ownership — hard exclusion: reject a confirmed institutional sponsor or public

parent. Unclear ownership receives one bounded source check and then remains unknown.

• Branch fit — ranking factor: order passing companies by travel time, service

density, and capability overlap with the platform.

The revised version will still produce unknowns. Good. It will also tell the team what those unknowns mean and what happens next.

Common mistakes

Starting with filters instead of the objective

A database filter is constrained by what the provider sells. The acquisition objective should determine the criteria; sources and filters follow.

Treating every preference as mandatory

An over-constrained thesis can erase the market before the team learns anything. Keep true requirements separate from ranking preferences.

Giving unknown facts a neutral score

Neutral often behaves like a quiet pass. Route unknowns explicitly to research, review, a qualification question, or rejection.

Changing the rule to fit an attractive company

Record an exception or create a new version. Silent changes make prior decisions incomparable.

Mixing fit with contactability

A verified email address does not make a company fit the thesis. A strong company without a ready contact should remain in research rather than disappear. The full evidence-backed target-pipeline guide keeps discovery, thesis qualification, and contact readiness as separate decisions.

Put the criteria to work

The finished artifact is not the worksheet. It is a search in which every company can show the rule version, evidence, pass/reject/unknown state, reviewer decision, and next owned action.

DealPort Workbench is designed to keep those research and review decisions together while HubSpot remains the commercial record once a company reaches an approved handoff. If you have a live or planned acquisition mandate, use the worksheet above and request a live thesis review. We can compare the rules against a market your team already knows.

FAQ

What are acquisition thesis criteria?

Acquisition thesis criteria are the explicit standards used to include, reject, rank, or hold potential acquisition targets. A usable criterion defines its intent, pass rule, reject rule, acceptable evidence, unknown action, and review owner.

What criteria should be used to evaluate an acquisition target?

The criteria depend on the acquisition objective. Common categories include business model, customer base, geography, ownership, scale, financial profile, strategic capability, operating fit, and named exclusions. Each category should be written as an observable decision rule rather than a broad preference.

How specific should search-fund acquisition criteria be?

They should be specific enough that two reviewers can apply them consistently, but not so narrow that public information is expected to prove facts it cannot observe. Hard requirements, ranking preferences, evidence standards, and unknown handling should be separate.

Should an unknown criterion reject a target?

Only if the thesis explicitly requires that fact to be known before the target can advance. Otherwise the unknown should trigger a named action: another bounded source check, reviewer hold, qualification question, or later diligence step.

How often should acquisition criteria change?

Change them when market evidence, direct conversations, or the buyer’s strategy shows that a rule is wrong or incomplete. Version every change, record who approved it, and identify which prior company decisions require another review.

What is the difference between acquisition criteria and a target list?

The criteria are the rules. The target list is the company-level record produced by applying those rules, attaching evidence, preserving unknowns, and recording reviewer decisions and next actions.