3 Types of Business Buyers & How to Attract Them

February 2023

3 Types of Business Buyers & How to Attract Them

Selling a business is an exciting milestone, but it requires careful planning if you want to maximise the value of the transaction. When selling your company, you may receive offers from three types of business buyers: financial, strategic, and individual.

These buyers have different needs, characteristics and goals. You must consider the type of buyers interested in acquiring your company and their motivations.

This blog will give you an overview of these different business buyers and help you find the right buyer for your business.

1. Strategic buyers

Strategic buyers are usually small or medium-sized businesses looking to acquire other companies within a similar industry to achieve synergies.

These business buyers may have various goals and objectives such as:

  • Increasing their market share
  • Expanding their customer base
  • Acquiring experienced employees
  • Diversifying their product base

Strategic business buyers are often willing to pay more for businesses that they want to acquire. This is because they tend to have ambitious objectives and see long-term value in the deal.

How to attract strategic buyers

Strategic business buyers are looking for companies that will provide long-term value and positive returns. You can attract these buyers by:

  • Maintaining a strong company reputation
  • Providing consistent financial forecasts
  • Building a talented and loyal team
  • Highlighting your technology and the quality of your products or services
  • Demonstrating all possible cost savings to reduce business overheads

2. Financial buyers

Financial buyers tend to be private equity firms that value a company based solely on revenue and return on investment. These business buyers have two main goals: (1) to generate a high return for investors and (2) to develop an exit plan.

In most cases, financial buyers plan to use capital to scale a company over a shorter investment period (usually three to seven years) before exiting. Financial business buyers are less likely to get involved with daily operations and the seller may maintain partial control of the business.

How to attract financial buyers

Financial business buyers are looking for companies that are stable and have strong growth potential. You can attract these buyers by:

  • Building a strong management team
  • Increasing your EBITDA margin
  • Displaying consistent historical financial performance
  • Implementing clear business processes that can easily be replicated

3. Individual buyers

Individual business buyers are typically high-net-worth individuals who are looking for an opportunity to have more freedom, build wealth, or improve their professional reputation.

They typically target smaller companies and will maintain significant involvement in the business’s operations after the deal.

How to attract individual buyers

Individual business buyers are looking for low-risk companies with a proven track record. You can attract these buyers by:

  • Providing consistent financial records and forecasts
  • Highlighting the unique selling points (USPs) of your products, services and industry
  • Emphasising the aspects of your business that align with the buyer's interests and experience

TIP: Many individuals are nervous about buying their own business and they may find the process daunting. Avoid overwhelming them with too much information.

Choosing the right buyer for my business

Every buyer has different needs, goals, and motivations - you must consider these carefully and choose the right buyer.

Here are 5 things to consider when choosing the best buyer for your business:

  1. Industry
  2. Company size
  3. Timing of the sale
  4. Nature of operations
  5. Motivations to sell

How to sell my business online

Marketplaces like Foundy have revolutionised the M&A market and made selling a business quicker, easier, and more cost-effective. Joining an online selling platform is typically much cheaper than going through a broker, helping you maximise value from the transaction.

Suggested reading: How to Plan Your Business Exit Strategy in 2023

List your business for free on Foundy!

At Foundy, we offer an all-in-one platform where founders can showcase their companies to credible buyers, seek advice from professional M&A experts, and find other businesses to acquire.

You can set up an account on Foundy for free and list your business in front of thousands of potential business buyers in just 15 minutes.

Join Foundy for free today or reach out if you have any questions - we’re always happy to help!

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