Unlocking Buyer Visibility: How the Right SIC/NAICS Code Impacts Your Sale

When it comes time to sell your business, one detail many overlook, but which can make a big difference is your industry classification. Standard Industrial Classification (SIC) and North American Industry Classification System (NAICS) codes do more than just satisfy bureaucratic requirements. In M&A and business brokerage, they significantly shape how visible you are to potential buyers, which in turn affects valuation, deal timelines, and buyer fit.

Why SIC/NAICS Codes Matter

These codes function like “search tags” in the business-sale ecosystem. Buyers, investors, lenders, business brokers, and M&A platforms often use them to filter deal listings, source targets, run comparables, and analyze industries. If your company is mis-classified, you may never show up in searches where you ought to, or you may show up among irrelevant comps, distorting perceptions of value.

According to Investopedia, NAICS codes are used to classify businesses by their “largest revenue-generating activity,” which makes them critical for aligning with relevant industry data.

Impact on Buyer Targeting

Searchability & Deal Platforms: Platforms like Axial, PitchBook, or smaller niche M&A/brokerage platforms allow buyers to filter by SIC/NAICS. If the code is too general or wrong, you may be filtered out.

Valuation Comps: Valuing a business often means comparing it to public or private peer transactions in the same industry. If mis-classified, your business could be benchmarked against lower or higher margin companies, distorting value.

Marketing & Lead Gen: Marketing efforts (digital campaigns, listings, email outreach) that use industry segmentation rely on codes. A more precise NAICS/SIC helps narrow in on the right set of buyers. Data providers show that targeting via codes vastly improves campaign efficiency

Real-World Consequences

Visibility Lost: A business might not show up in relevant buyer search filters, meaning strategic buyers never see the opportunity.

Misaligned Comparables: Valuations based on wrong comps can lead to undervaluation (or over-valuation, which may scare off buyers when further due diligence corrects the picture).

Longer Sale Process: Fewer inbound buyer leads and marketing misfires lead to longer time on market and higher transaction costs.

How to Get It Right

Audit where you are listed: Check what SIC/NAICS code you’re using in government filings, your state/business registration, in commercial databases, in listings, and in any industry directories.

Define your primary business activity: Use the activity that generates the most revenue as the basis for the code. If you have multiple lines, pick the one most relevant to potential buyers.

Update all materials: Once you decide on the correct code, advisors like Capstone M&A ensure your Confidential Information Memorandum (CIM), teasers, marketing decks, website listing, etc. all use it.

Choosing the correct SIC/NAICS code isn’t just an administrative task, it’s strategic. It can affect whether your business is seen, how it’s valued, and how quickly it finds the right buyer. Mis-classification can lead to lost visibility, misaligned valuations, and longer deal timelines. Getting it right puts you where buyers are already searching.

---

Sources

1. Investopedia, “North American Industry Classification System (NAICS) Overview” (on how the codes classify business by main revenue activity) Investopedia

2. Investopedia, “What Is a SIC Code” (for background on SIC, its continued use, and its structure) Investopedia

3. Acquisition Assist, “Red Flag in Due Diligence” (on how SIC codes are used in M&A to identify targets and assess fit) acquisitionassist.com

4. 6sense, “SIC/NAICS Codes – How They Can Help in Prospecting” (on segmenting prospects, industry targeting via codes) 6sense

5. NAICS.com / Winvale, “NAICS Codes – What Do They Mean for Your Business?” (on opportunities for government contracting and proper code setting) info.winvale.com+2Buy GSA+2