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:
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.
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.
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.