Finding Strategic Buyers For Your Business

The best method to increase the selling price of a business is to find more buyers for it.  The competition between the buyers will increase the offers for the business.  The selling price can be even higher if the buyers are strategic buyers. 

Here is the difference between what we call a “financial” buyer and a “strategic” buyer.  A financial buyer evaluates the business based on the income of the business as a standalone business.  However, all financial buyers are not the same and they will come up with different offers for a business.  The strategic buyer is one that will earn more from the acquired business than a financial buyer because of unique characteristics of the acquiring company.  They may save costs by eliminating duplicate personnel, or utilize their equipment better, or the purchase of the acquired business may allow the acquirer to enter new markets.  The acquirer may have a better sales force that will allow them to sell the acquired company’s products to more customers. 

describe the imageTheoretically, a strategic buyer may offer more, than a financial buyer, for the acquired business because the acquired business will generate more income to them.  However, if there is only one strategic buyer, and they are aware of it, they may not offer more than a financial buyer knowing that they don’t have competition from another strategic buyer.  It may also be that, despite earning more from an acquired business, they simply are unwilling to pay as much as a financial buyer for the business.  For these reasons, we want to find as many buyers as possible, financial and strategic, to sell a business for the best price. 

Traditionally, the M & A consultant would identify all of the potential strategic buyers for a business and contact them about the opportunity.  We do this search, but we add more to it.  It is difficult, if not impossible, to identify all the potential strategic buyers. Today, potential buyers can come from all over the world.  Fortunately, the Internet is a great way to reach them.   Our website and other Internet advertising that we do reaches many more potential buyers while keeping the identity of the business confidential. In many cases, these are better strategic buyers because they want to find a business to buy.

Contact us to discuss your situation and learn more about how we can help you sell your business with our M&A services.

BayState Business Brokers, 61 North Beacon Street, Suite 203

Boston, MA 02134

T: 617-562-5700