PROFILING COMPANIES IS A SKILL

Avoid the Shallows in M&A Origination

Most acquirers believe they understand the companies they’re targeting. They subscribe to a data provider, run searches based on revenue and sector, and confidently build lists of potential acquisitions. The numbers look right. The industry codes match. The employee counts fit the criteria. Job done!

Then the outreach begins, and reality interferes: half the companies don’t actually do what the database says they do. Key decision-makers aren’t who they’re supposed to be. The businesses revealed bear little resemblance to what the data promised.

The uncomfortable truth is this: profiling companies accurately is a skill, not a search function. And most acquirers are working with far lower accuracy than they realise. And that accuracy affects time spent and the outcomes.

The Business Data Trick

Data suppliers make compelling promises of comprehensive coverage, regularly updated information and a turn-key solutions to origination. You are led to believe that finding the right targets is simply a matter of choosing the right filters.

Recent research we undertook by testing four premium data suppliers across three distinct UK sectors revealed something different. When searching for SaaS companies with 5+ employees and £1-5m in annual recurring revenue, the largest single supplier captured 1,579 companies. That sounds impressive until you realise the total addressable market across all four suppliers was 2,173 companies. The top performer was missing 27% of targets.

In injection moulding, the picture shifted entirely. The supplier that dominated SaaS delivered just 38% of the total market. A different provider captured 36%, and a third contributed 33%. No single source came close to comprehensive coverage.

For HVAC businesses, the patterns changed again. The supplier that performed poorly in the previous searches suddenly delivered 54% of targets, whilst one of the stronger performers in other sectors collapsed to just 2.5% coverage.

If you randomly chose one of these premium suppliers, on average you would reach only 29% of your addressable market. Not the 80% or 90% their sales teams might imply. Less than a third. In which case the majority of potential acquisition targets would remain invisible to you.

Why Coverage Varies Wildly

The variation isn’t random. It reflects fundamental differences in how data suppliers gather and categorise information.

Some rely heavily on Companies House data supplemented by website scraping. Others use individual country registries combined with local data sources. Some deploy advanced web scraping technology with real-time data gathering. Each approach has strengths in certain sectors and blind spots in others.

A software company with a strong digital presence will be well-represented in databases using web scraping. A traditional engineering firm with minimal online footprint might only appear properly in registry-based sources. An HVAC business could be categorised under construction, mechanical services, or facilities management depending on the supplier’s classification system.

The challenge deepens when you consider data decay. Companies pivot fast. An injection moulding specialist in 2025 now does 40% assembly work, or is now a reseller and distributor of other products. A SaaS company has shifted from B2B to B2C meaning that customer volumes are down, but churn is also better. A HVAC installer now focuses primarily on maintenance contracts and breaks even on supply. The data doesn’t catch up.

Overlaps That Aren’t

Perhaps more surprising than the low coverage was how little overlap there was between data suppliers.

When comparing one supplier’s list against the total combined list across all sources, the greatest numerical overlap was just 49 companies out of 2,173, representing 2.25%. The highest percentage overlap was 9.74%. On average, only 5% of companies appeared in multiple databases. The outcome is that choosing between Supplier A and Supplier B isn’t about picking the better one. It’s about accepting that whichever you choose, you’ll miss out.

For acquirers, this creates a strategic problem. You cannot know what you’re missing. If your chosen database returns 200 companies matching your criteria, you have no way to know whether that represents 30% of the market or 70%. Invisible targets remain invisible.

What the Data Doesn’t Tell You

Even perfect data coverage would only solve the visibility problem. It wouldn’t address the profiling challenge as most data is at best partial.

A database entry might list annual revenue, employee count, and SIC codes. It might show registered directors and filing history. What it won’t show is whether the founder is approaching retirement, whether the company is actively seeking strategic partnerships, or whether recent growth has created integration challenges that make acquisition timing particularly attractive.

Data won’t reveal that the engineering firm’s client base is concentrated in three accounts, creating risk. It won’t show that the SaaS company’s growth has stalled because the product requires significant reinvestment. It won’t indicate that the HVAC business has a reputation problem in its core market.

These insights come from research. From understanding not just what a company does, but how it operates, where it’s vulnerable, and why it might be open to a conversation. From looking at supplier relationships, client testimonials, planning applications, trade association memberships, and recruitment patterns.

One technology client spent twelve months building what they considered a comprehensive target list through their own research. Within two months of engaging external support, that list had doubled. Not because the client lacked intelligence, but because thorough profiling requires dedicated expertise and access to multiple information sources that most acquirers don’t maintain.

Another client operating in a highly specialised software niche believed they’d identified every potential target. They knew the sector intimately, having worked in it for years. Additional research uncovered five more companies within a week. These weren’t hidden businesses. They simply hadn’t appeared in the original research because they described their services differently or operated through different channels.

There is Skill in Profiling

Profiling companies well requires three capabilities that data alone cannot provide.

First, sector knowledge. Understanding how businesses in an industry actually describe what they do, which trade bodies matter, where they advertise, and what signals indicate quality or distress. A SaaS company targeting accountants might describe itself as financial software, practice management, or professional services technology. Each term would place it in different database categories. Knowing which variations to search requires sector fluency.

Second, analytical judgement. Raw data needs interpretation. A company showing 20% revenue growth might be thriving or struggling. It depends whether that growth is organic or acquisition-driven, whether margins are improving or deteriorating, and whether the customer base is expanding or just spending more. These questions require analysis, not algorithms.

Third, continuous verification. Companies change. Ownership structures shift. Strategic focus evolves. The HVAC firm acquired a controls business six months ago and now operates differently. The engineering company lost its largest client. The software business pivoted to a new vertical. Profiling isn’t a one-time activity. It requires ongoing monitoring to ensure targets still match your criteria.

Most in-house teams lack the capacity for this level of profiling across multiple simultaneous searches. They’re focused on deal execution, negotiation, and integration. Running comprehensive origination on top of those responsibilities stretches resources impossibly thin. They default to simpler approaches: single data sources, narrower search criteria, and acceptance that they’re only seeing part of the market.

The Knock on Effect of Inadequate Profiling

The consequences of inadequate profiling compound through the acquisition process.

Narrow target lists mean fewer opportunities, which reduces negotiating leverage. If you’re speaking to 30 companies when you should be speaking to 100, sellers have less reason to engage seriously. Your hit rate suffers not because your proposition is weak, but because your sample size is too small.

Poor quality profiling leads to wasted outreach. Contacting companies that don’t actually fit your criteria irritates potential targets and damages your reputation in the market. Word travels quickly in specialised sectors. If you approach several businesses that clearly aren’t appropriate, others will hear about it.

Most significantly, incomplete profiling creates blind spots in your market understanding. If you’re only seeing 30% of potential targets, your sense of market dynamics, typical valuations, and competitive positioning will be skewed. You might overpay for a business because you don’t realise three similar companies exist. You might walk away from a sector because the visible opportunities look unpromising, whilst better options remain hidden.

One adhesives industry client with highly specific acquisition criteria challenged the thoroughness of a compiled target list. They sent additional company names they believed had been missed. Maintaining detailed records of every business reviewed and why it was excluded meant responding with the precise criteria and specific reasons for excluding each one. The companies hadn’t been missed. They simply didn’t meet the requirements once properly profiled.

Another client in HVAC wanted comprehensive coverage within a narrow EBITDA range, focusing exclusively on pure-play HVAC businesses with no additional services. They questioned whether the research truly represented the full market. Six months later, despite committing to their own parallel research effort, they’d identified no additional qualifying companies. The profiling had been thorough.

To Be Comprehensive, You Need…

Achieving 90%+ market coverage requires commitment that most acquirers underestimate.

At minimum, you need three to four premium data sources, costing £40,000 to £60,000 annually. That investment only makes commercial sense if amortised across multiple acquisition projects, not a single search.

You need the expertise to synthesise information from disparate sources, each with different data structures, classification systems, and quality levels. You need processes to identify duplicates, verify information, and continuously update records as businesses change.

You need sector-specific research capability to find companies that don’t appear in standard databases. Trade publications, industry events, supply chain analysis, planning applications, and specialist directories all provide intelligence that supplements commercial data sources.

You need analytical frameworks to assess which targets genuinely match your criteria and which only appear to on the surface. That requires understanding business models, growth drivers, and operational characteristics at a level that database filters cannot capture.

For most acquirers, building this capability internally represents a substantial investment in people, tools, and processes. The alternative is accepting that your origination will be partial and potentially skewed, or partnering with specialists who have already made those investments and developed the methodologies to extract maximum value from combined sources.

The Market Always Moves

Even perfect profiling today won’t remain accurate tomorrow. Markets are dynamic. Companies start, grow, pivot, and merge constantly.

Some businesses operate deliberately below the radar, particularly in niche sectors. They don’t seek visibility and rely on referrals and relationships. Standard data sources miss them entirely because there’s nothing to scrape, no registry entry beyond the basics, and no digital footprint to analyse.

This is why profiling is a skill rather than a task. It requires ongoing attention, continuous verification, and the judgement to distinguish meaningful change from noise. A new director appointment might signal strategic shift or simple succession. Increased headcount could indicate growth, or inefficiency. Understanding which signals matter requires expertise that develops through repeated exposure to how companies actually behave, not how databases describe them.

The Way Forward

For acquirers serious about origination, the mathematics are unforgiving. Single-source strategies deliver incomplete market views. Even choosing the “best” data supplier leaves vast portions of your addressable market invisible.

The variation in supplier coverage across sectors means you cannot predict which source will perform well for your particular search. The supplier that dominates software might be weak in engineering. The source that excels in consumer services might miss industrial businesses. You discover the gaps only after wasting time on inadequate outreach.

Multiple data sources provide better coverage but require significant investment in tools and expertise to use effectively. For organisations running continuous acquisition programmes, that investment pays dividends. For those conducting occasional searches, the cost-benefit calculation is less clear.

There is another approach. Partnering with specialists who have already made these investments, developed sector expertise, and built the analytical frameworks to synthesise multiple data sources into actionable intelligence. This shifts the model from fixed costs to performance-based engagement, giving internal teams freedom to focus on deal execution rather than target identification.

The research is clear. If you rely on a single data source, you will reach approximately 30% of your addressable market on average. It could be better. It could be worse. You won’t know until you’ve invested months of effort and then compared notes with someone who has access to broader data.

Profiling companies properly requires multiple premium data sources, sector expertise, analytical judgement, and continuous verification. Most acquirers lack either the resources or inclination to build that capability. Those who do gain significant advantage. Those who don’t must either accept limited market visibility or find partners who can provide it.

The data doesn’t lie. Neither should your origination strategy. If you want to discuss how specialist origination could support your acquisition strategy, contact Unloq on 01962 609 000 or book an appointment with one of the team.