A Look at Today’s Business Buyers

Once you’ve decided to sell your business, you’ll quickly learn there are a variety of possible investors.  Let’s take a look at some of the categories of  investors that you may encounter.

Family Members as Buyers

You may find that you already know potential buyers in the form of your family members.  Many sellers really see this as being a major advantage due to continuity.  Often a family member buying a business encompasses years of preparation.

While having a family member take over your business can be ideal, there are some potential hurdles as well.  For example, what if your family member doesn’t have enough cash?  Also you may find that it is more difficult to leave behind your responsibilities.  These types of issues can cause serious disruptions.  If an outside party buys your business, you will avoid these types of “I told you so” situations.

The key to deciding on a family member should incorporate three aspects: ability, family agreement, and financial worthiness.

Can a Business Competitor Buy Your Business?

This is a viable category of prospective buyer, although it is often overlooked.  Many sellers become concerned that a competitor will try to lure away customers when he or she finds out that the business is for sale.  On the other hand, many competitors are looking to expand.   In this particular instance, a business broker can be truly invaluable.  They will use confidentiality agreements and only reveal the name of the business after the competitor has been fully qualified and the seller has been contacted.

What are Strategic Buyers?

Strategic buyers feel that a particular business would complement theirs and that combining the two would result in lower costs, new customers, and other advantages. The good news is that these buyers are more likely to pay more than other types of buyers.  Usually strategic buyers focus on businesses that are larger in size.

Are Financial Buyers Right for You?

Financial buyers may have a long list of criteria they are seeking.  If you are a seller that wants to continue to manage your company after the sale, this type of buyer may be the right fit for you.  Often they will offer less money, but they will make provisions for sellers.  In fact, they may listen to your input on issues like employee selection and location.

Keep in mind that your profits need to be sufficient to attract a financial buyer.  This new owner will expect a return.

The Individual Buyer

Small to mid-sized businesses tend to gravitate to individual buyers.  These buyers are usually at least 40 years old and quite seasoned.  Often the individual buyer sees owning a business as a dream, and he or she can afford that dream.  Keep in mind that dealing with this type of buyer can be less complicated as fewer strings tend to be attached.

A Final Note

If you are wondering what kind of buyer is best suited for your company, turn to the professionals.  Contact Provest Properties today and we can offer you guidance to enable you to locate your ideal prospects.  We look forward to hearing from you.