What Categories of Buyers Are Out There for Your Company?

It is important to consider the types of buyers that may be interested in your business. There are two primary types. Strategic Buyers, as you might guess, have a strategic purpose for owning your business. They may want to add it to their existing lines of business or to another company they own, achieving complementary revenue growth or expense efficiencies. They may plan the acquisition of your business as the best entry point for entering a new business. And then perhaps use your business as a “platform company” for growth.

The other type is a Financial Buyer. That is, a buyer that is buying for the sole purpose of growing the business and ultimately selling it for a financial return. Financial Buyers tend to be private equity firms and, increasingly, family offices. And they could be local or regional groups of investors. As with Strategic Buyers, they may be acquiring for the purpose of adding it to another company they own or with the intent of using it as a platform company that will bolster its growth by making acquisitions itself. 

While both types generally have minimum size thresholds, the thresholds for Financial Buyers are generally higher. Today, it is rare for a private equity firm to be interested in a company worth less than $5MM. 

In one of our case studies, a cross-town rival in the pet services business might be interested primarily for strategic purposes. A local consortium of wealthy investors may be interested primarily for financial purposes.

GROW and SELL Advisors, wholly-owned by Traversi & Co., LLC, is a premier sell-side M&A advisory firm – a boutique investment bank – serving the lower middle market.  Visit us here.

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