diffeent buyers

The 5 Different Types Of Buyers and What They Want…

Most business owners think that all buyers and investors are more or less the same. This is a massive mistake and is the BIGGEST REASON most businesses never achieve the right price on exit.

Knowing the different types of buyers and what they’re motivated by will give you a huge advantage in negotiations and help you get the deal done in a much shorter period of time.

So here are the 5 types of buyers we’ve negotiated with and the type of exit strategy that suits them best…

Buyer Type #1 – High Net Worth Individual

This buyer has substantial financial resources at their disposal. They normally have run their own show and built a successful business on at least one occasion. In the majority of cases they will be looking for a good return on their investment and be very focused on their exposure. This normally means they will limit their investment to no more than a £1M. This type of buyer can be a great option especially if their skill sets and contact network match up with the seller’s business type.

Buyer Type #2 – Synergistic Business

This is normally a business in a related sector that will be worth more than just the sum parts if the businesses were to merge. A good example of this is could be a property developer who buys a mortgage business. The developer can now offer preferential deals making it easier to sell the projects they are developing.

Buyer Type #3 – Strategic Business

This buyer is nearly always looking to expand in their market and is looking for acquisitions to help them achieve this goal. Things they will be looking for are new technologies, client lists and ways to eliminate competition through an acquisition strategy.

Buyer Type #4 – Investment Business

This type of entity are interested in one thing – return of X by a given period. These types of buyers can be venture capital companies looking for deals where they can make a considerable return in as short a time as possible. They will have their own exit strategy when they are looking to buy which can include looking at companies with an amount of debt on their balance sheet which lowers the valuation but means there is an opportunity to sell at a much higher price in 3-5 years time.

Buyer Type #5 – Industry Sector Business

The last type of buyer is usually a last resort and is a competitor from the same industry sector. This buyer may be an option when all other roads have come to a dead end as they will normally only want to buy assets and usually for a lot less compared to what the seller values those assets at.

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