Core Buyer Types | O'Keeffe & O'Malley | Mergers & Acquisitions

Core Buyer Types

Mar 03, 2024

If you're thinking about selling your business, it's important to understand the types of buyers that might be interested in acquiring it. By identifying and targeting the most qualified and motivated buyers, you can increase your chances of getting the best possible deal. Here are three types of core buyers you should be aware of:

1. Individual Buyers: 

These are typically entrepreneurs who are looking to acquire a business to run themselves or as part of their investment portfolio. They are motivated by the desire to be their own boss and build something they can be proud of. Deal sizes for individual buyers typically range from $500,000 to $5 million depending on the size and complexity of the business.

2. Strategic Buyers: 

These are businesses operating in the same or a related industry that are looking to expand through acquisition. They are interested in companies that can provide them with new products or services, access to new markets, or increased operational efficiency. Strategic buyers may also be interested in acquiring a competitor to eliminate competition. Deal sizes for strategic buyers can range from $1 million or more, depending on the opportunity.

3. Private Equity Groups: 

These are financial firms that invest in private companies or acquire businesses with operators in place. They pool capital from high-net-worth individuals, pension funds, and other institutional investors to acquire companies.

Private equity groups (PEGs) are known for their ability to bring operational expertise and strategic guidance to their portfolio companies, as well as providing access to capital markets and other resources that can help businesses grow and expand. They often work closely with management teams to develop and execute a growth strategy, and they typically hold investments for several years before exiting through a sale or an initial public offering. The average deal size for PEGs are $5 million and above.

Other Factors to Consider:

  • It is important to identify the right type of buyer for your business. Each type of buyer has different motivations and priorities, so it is important to understand what each is looking for in an acquisition. Mergers and acquisitions (M&A) companies, like O’Keeffe & O’Malley, understand that a one-size-fits-all approach won't win deals. Instead, we tailor our sales process and marketing materials to resonate with the specific needs and motivations of different buyer types.

  • Consider the pros and cons of selling to each type of buyer. For example, selling to an individual buyer may give you more control over the transition process, but they may also be less able to provide the financial resources or strategic guidance that your business needs. Selling to a strategic buyer can provide you with a quick exit and a premium price, but you may have less control over the future of your business. Selling to a private equity group can provide you with access to capital and expertise, but they may also be more focused on short-term returns than long-term growth.

  • It is important to get professional advice when selling your business. As experienced M&A advisors, we can help you value your business, identify potential buyers, negotiate the terms of a deal, and close the transaction. Contact our team of advisors for expert advice.