Depending on the size and nature of your company, the universe of buyers that are in acquisition mode or contemplating an acquisition may include buyers within these categories:
Strategic Buyers: these could be a competitor of yours or a company that supplies a product or service to your company or your industry who wants to enter the industry as a method to grow and diversify their revenue. They could also be a customer of your business who for similar reasons wants to enter your industry. So the strategic buyer will want to determine if your company can be integrated into their existing operations benefitting them by implementing economies of scale, introducing new customers or new markets to them which hopefully drives and diversifies revenue and increases their margin. Consequently strategic buyers may pay a higher premium / multiple. Approaching a competitor or supplier of yours regarding a potential sale has obvious risks so an experienced advisor can provide a critical layer of anonymity and confidentiality.
Financial Buyers: these could be wealthy individuals, hedge funds, private equity funds and even former executives. They are not interested in the integration possibilities and have a primary focus on the businesses financial performance i.e. return on equity. They are typically long term investors and could be searching for well performing, well-managed company or a company that is struggling. Since the financial buyer is focused on a return on their investment they typically will not pay a premium for the business. This type of buyer may also be “buying a job” and are almost always buyers at the main street level and in lower M & A sized transactions.
An experienced advisor will work closely with their client to help identify potential buyers. Some buyers should and will be eliminated quickly based on the client’s comfort level and the buyer’s qualifications.
Arizona Business Sales & Acquisitions maintains a relationship with both strategic and financial buyers.
Call us to arrange a confidential no pressure conversation about how we can assist you in the successful exit of your business.
