Posted 11-10-2008 5:20 pm by
Although you will likely hire a business broker or merger to help you find someone to purchase your business, it is still a good idea for you to know more about the various types of potential buyers that you might want to consider.
Although you will likely hire a business broker or merger to help you find someone to purchase your business, it is still a good idea for you to know more about the various types of potential buyers that you might want to consider. By understanding the different types of potential buyers available, you will have a better understanding of how to find buyers as well as which type of buyer is best for you.
Financial Buyers
Financial buyers are those that are mostly interested in the current cash flow of your business. Therefore, these individuals are generally people or companies who have money to invest and are interested in purchasing other types of industries or businesses as an investment. Some of these buyers may be former executives from larger companies that are interested in purchasing a company to manage. Some financial buyers, however, are actually holding companies that simply want to receive a good return on their investment. In this case, they generally leave your current management system in place and allow you to continue running the business in the same manner.
Financial buyers will spend a great deal of time scrutinizing your financial statements as well as your assets. Since many are looking for companies that are well managed, they likely will not want to see a great deal of change take place after the purchase. In some cases, however, the financial buyer will look for a company that is not currently profitable in order to turn it around and make a greater profit from it.
Strategic Buyers
Strategic buyers are those that are interested in purchasing businesses that fit well within their long-range business plans. Competing businesses may be strategic buyers, as well as similar businesses operated in other regions who may be interested in expanding into your region. Companies that specialize in related businesses may also be interested in purchasing your business in order to expand its products or services.
Company Insiders
Other potential buyers include company insiders, such as your friends, family members or key employees. Some of these people may already have a personal stake in your business and they often know your business from the inside. Company insiders are often more willing to pay a higher price for a business because the inside knowledge they possess helps reduce their risks. Unfortunately, company insiders generally do not have the cash available to purchase the business, which means they have to make arrangements for financing.
Even though you will likely be hiring a broker to help you sell your business, it is a good idea for you to sit down with the broker and create a list of potential buyers. Be sure to consider everyone, ranging from your current suppliers and customers to your employees and your competitors. When considering your competition, expand the search to a national level and determine who might be an interested buyer. You should also make a list of those potential buyers that you do not want to sell your business to. That way, your broker will have a good starting point when searching for the perfect buyer for you.
AARON MULLER| ADVANTAGE COMMERCIAL BROKERS
BUSINESS BROKER, COMMERCIAL PROPERTY SPECIALIST
DIRECT: 425.766.3940
FAX: 425.882.2547
CHECK OUT MY LISTINGS AT www.acbrokersinc.com
