Should I sell to a strategic buyer?
From Your Multimillion-Dollar Exit, by Wayne Zell
What do strategic buyers look for?
Strategic buyers look at your business as a way of enhancing products or services they already sell, but you may give them a geographic or strategic advantage by allowing them to open in new markets or access new customers.
Strategic buyers may be looking for a company that can fill a value gap and enhance their business model. For example, if you have technology that the strategic buyer already relies on to deliver their products or services or includes as part of their product offerings, adding you to the buyer’s platform makes the buyer more valuable.
Why do strategic buyers pay more?
You may add value to their business in the form of new products or services they don’t currently offer. In other words, there’s something you have that they don’t, and they want to add your business to theirs to increase long-term profits. Because you have something they want as part of their platform, strategic buyers may pay you a higher purchase price for your business. Other strategic buyers may be individuals who want to buy your business.
How do I sell my business to a strategic buyer?
You may already know another company that could be a good candidate to buy your business. You may have worked on projects or joint ventures with them that, if you were part of their business, would increase their value. These strategic buyers may be ideal buyers for your business, but if you limit your choices to the businesses you know, you may be selling yourself short. An investment banker, a business broker, a corporate attorney, a CPA, or your board of advisors or directors may all help you expand your universe of potential strategic buyers through their extensive contacts and relationships.
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