Putting your Boston business on the market is a major decision with a lot of moving parts. One of the most important things you’ll do early in the process is define your ideal buyer, so that you can screen actual buyers against your criteria. Many owners think about funding, industry experience, and similar factors. Another thing you should consider is the buyer’s motivation for buying your business. Strategic and financial buyers often have different approaches. The right business broker or M&A firm is critical to helping you determine which is the right fit for your company. Here are the things to know as you weigh the options to sell a business.
Strategic vs. Financial Buyers: The Basics
Strategic buyers purchase companies because they hope the purchase will fit into a larger strategy for their own business, or for a group of businesses. For example, you might have valuable intellectual property that makes their business more competitive.’
Financial buyers see the company itself as an investment for which they hope to earn a significant return. They often appear in the form of private equity firms that hope to make a company significantly more profitable while reducing costs over three to five years. Their goal is to find companies with great growth potential, help them realize that growth, then sell to the highest bidder.
The two terms are a bit misleading, because both buyers care about corporate strategy, and both have financial incentives. In either scenario, your company wile be more attractive if it is already successful with growth potential. The main difference is how each type of buyer assesses and weights various factors.
To Whom Should I Sell My Business?
There’s no best buyer for every business and industry. Instead, the ideal buyer depends on your industry and goals. Ultimately, you want to get top dollar while seeing your company move in a direction you approve. Some considerations to weigh include:
An M&A advisory firm is critical to successfully selling your business to a buyer who understands your mission and goals. Don’t try to do this yourself. A once-in-a-lifetime transaction demands support and expertise.