Buyers You Will Encounter When Selling A Business
Even if you have just began considering the sale of your company, you have certainly already recognized that the world of mergers and acquisitions may be daunting and there is plenty to learn about the selling process. An important part of our process is to educate our sellers on the various types of middle market M&A buyers they may encounter so they can better understand the buyer’s priorities and decision-making process.
High Net Worth Individuals
Individual purchasers are financially secure individuals interested in purchasing and managing their own business. In most instances, the individual buyer desires to leave Corporate America (or escape state taxes, cold weather, etc.) and become self-employed. This buyer typically has great sales, marketing, leadership, and people skills and places a premium on purchasing a business that resonates with his or her passions. Geography is also significant because this consumer often seeks to switch sectors, not just relocate.
Advantages of working with a private buyer:
- Not interested in transferring or significantly altering the business.
- Prefers the current employee structure should be maintained. In reality, a buyer will rely on key workers to ensure a smooth transition into the organization.
- Typically possesses a solid management resume that should aid in the expansion of the organization.
- The majority of individual purchasers are owner-operators who intend to be involved in day-to-day operations.
Possibile Difficulties When Working With Individual Buyers:
- The buyer may have less industry experience (but his or her resume should allow for a short learning curve).
- Fewer financing and transaction choices. Typically, a private buyer will acquire a loan backed by the SBA. This is a frequent practice in the tiny market and an excellent program for first-time purchasers.
- There may be a learning curve associated with the M&A process. Our procedure facilitates the buyer’s education and brings him or her up to speed.
Strategic Buyers are typically well-established business owners from the same industrial sector seeking to expand by acquisition. Typically, a strategic buyer already has a successful business with similar product offerings and is looking to either grow into your geographic zone or acquire a company that specializes in a product or service that he or she lacks. Strategic buyers typically possess substantial financial resources, industry expertise, and the knowledge required to assure the success and longevity of a business.
Advantages of collaborating with a strategic buyer:
- Greater variety of accessible financing alternatives.
- Capable of elevating the company’s degree of performance and profitability.
- Industry and managerial experience in the past.
Possible difficulties when working with strategic buyers:
- Possible loss of company identity as a result of a merger with the buyer’s current business.
- Culture shifts or the termination of positions as a result of firm mergers.
- Not always the best financial offer – these buyers know both the pros and cons of your industry
Financial buyers are typically a group of two or more investors seeking to acquire, invest in, and resell a highly profitable business located in a thriving region. Financial buyers are also known as private equity groups, partners or family offices, and their primary objective is to maximize the return for their investors. Sometimes, financial buyers seek to acquire a “platform firm” in order to provide a strong foundation for future expansion. Alternatively, they may already own a platform business and are searching for privately held businesses that would make excellent add-on possibilities. Financial buyers typically have a spectacular job history and good financial capabilities, as well as the finances necessary to propel the business’s expansion.
Advantages Of Collaborating With A Financial Buyer:
- Minimal culture change inside the organization, and the executive team frequently remains the same.
- Professional purchasers are frequently associated with a quicker closing procedure.
- Packages of financing made simpler due to a better net worth or existing money.
Potential Difficulties When Dealing With Financial Buyers:
- The corporation may change hands between 5 and 9 years from now.
- The desire to retain management may conflict with Seller’s exit strategies.
- Possess a minimal level of profitability; often, $1 million or more in adjusted EBITDA or higher to be interested in the acquisition candidate. If they already have a platform within the industry, this minimal profitability can be reduced.
These three categories of buyers have distinct advantages and disadvantages, but at Sunbelt Business Brokers of South Florida, we are highly skilled at vetting each bidder to ensure that we identify the ideal match for your firm.
While sales price and finance are crucial aspects of selling a business, the manner in which you exit the organization is as crucial. Finding a suitable match is key.
Before introducing them to you, the Seller, we pre-qualify each buyer according to Sunbelt’s criteria. To preserve your privacy and confidentiality, we demand all prospective buyers to sign a non-disclosure agreement and present a financial statement demonstrating their ability to purchase and run your firm.
Talk to a Sunbelt South Florida broker today!
Sunbelt Business Brokers of West Palm Beach provides dedicated business brokerage services for all of your selling needs. Whether you are an established business owner nearing retirement and looking to sell, or an ambitious entrepreneur seeking your next investment opportunity, there is no reason to look beyond Sunbelt Business Brokers. Visit us at 800 Village Square Crossing
Suite 216 Palm Beach Gardens, FL 33410 or contact us at (561) 832-9222.