I often get asked by owners who are looking to sell their business on the BizBen ProSell Program about what type of buyers they should expect to encounter during the sales process. The answer depends on the type of business being sold, but in general there are several different types of buyers that could be encountered. Potential buyers of businesses vary from entrepreneurs to publicly owned companies. The ideal buyer for a business depends upon the various characteristics of the company being sold.
Here are examples of some of the different types of buyers one may encounter while selling their business:
(1) Individual entrepreneurs pursuing their dream of owning their own business.
(2) Employees looking to buy out the owner.
(3) A family member looking to keep the family business in the family.
(4) Corporations with strategic reasons for buying a business beyond just financial ones.
(5) Foreign investors seeking entry into the country as well as economic support once here.
(6) Silent investors seeking higher returns than might be available in other investment options.
Most buyers are almost always motivated to purchase a business for two reasons - synergy and/or economy. A buyer motivated by synergy is a buyer who believes that the value of combining firms or companies is greater than the value of the company s continuing to operate separately. By acquiring or merging overall market share can be increased, competition is reduced and product lines or management skill can be added. The economically motivated buyer evaluates buying a business strictly on the economic benefit to them from owning the firm, typically thought of as return on investment.