Article Review: Who Is the Right Buyer for Your Business? | Divestopedia

Adam Croft , May 29, 2017    

Key Takeaway: With all the potential buyers out there, how do you choose the right buyer for you?

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Depending on the company’s profile, trading outlook, management structure and growth potential, shareholders who are considering their exit strategy may have more than one type of buyer for consideration to approach, in order to ensure they maximize the value they receive.

Types of Buyers

Defensive 

A sale to a competing company.  It can generate the greatest financial return, but also carries a confidentiality risk. Competitors acquire to enhance their business model, synergistic savings, buying power and market share.  

Synergistic

A sale to a company in a different market. This buyer may or may not be aware of synergies between your businesses. The tactic is to make them aware. This type of buyer will not have identified your company as an acquisition target. It will take time to demonstrate why you are a good acquisition. 

International Entity

 A sale to an international entity. This buyer operates within the same markets, provides similar products and services in other countries, but will not have a presence in your area. The challenge is to convince them they need to pay a premium to unlock your customer base vs. growing organically. Again, it will take time to demonstrate why you are a good acquisition. 

Financial or Private Equity

 A sale to a financial buyer or private equity firm. Private equity invests in companies having potential for significant near-term growth that they can sell at a significant gain in 3-5 years. Private equity firms either invest capital to unlock growth, or convert the company into a platform to consolidate a fragmented market.

Private equity firms typically value lower, but they allow management equity to be rolled over, offering the potential of a much higher, long-term gain based upon the future sale.

Conclusion

You will only get to sell your business once, so you owe it to yourself to ensure it is to the right buyer.

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For additional information regarding Florida business sales, acquisitions and valuations, please contact Eric J. Gall at Eric@EdisonAvenue.com or 239.738.6227. Also, visit our Edison Avenue website at www.EdisonAvenue.com. To search for Florida Businesses for Sale: CLICK HERE