Business buyer profiles
When selling my company, what should I expect from prospective buyers?
There are two classic types of business buyers: the financial buyer and the stategic buyer.
- Financial buyers will calculate how much profit they can make, or how much free cash flow can be generated (or both), and give you a multiple based on those determinations. Be prepared to provide financials and other supporting information to answer their questions.
- Strategic buyers see a fit between your company and theirs, which may cause them to pay a premium over what a financial buyer would pay. Be prepared to provide information that will highlight the strategic potential, as well as the financial information.
Since you likely won't know how any given prospect is motivated in the initial contact, be prepared to work with both types of prospective buyers.
Brain Trust contributor:
Related Categories: Accounting, Finance, Taxes, Business Buying And Selling, Cash Managment, Investors, Negotiating, Retirement And Exit Strategies
© 2007, Small Business Network, Inc., All Rights Reserved.
AskJim ID: 348