What types of buyers are there in a business sale?

Strategic buyer

: A strategic buyer is usually active in the same or a related sector and sees the takeover As an opportunity for growth or synergy gains. This type of buyer can offer a higher price because they capture value from integration and cost savings. They often have the resources to finance the acquisition quickly and often have experience taking on management roles, allowing them to quickly replace the managing director.

Management buyout (MBO) or family

: At a management buyout the company is taken over by the existing management, while in a family transfer A family member takes over the company. The advantage of this type of buyer is that they are already well-versed in the business operations and the market, which increases the chance of a successful acquisition. The disadvantage, however, is that management or family often have limited financial resources, so they usually turn to the seller for additional financing, for example, in the form of a loan or earn-out arrangement.

Management buy-in (MBI)

: At a management buy-in An external manager or a group of investors acquires the company. These buyers often have extensive experience and a fresh strategy, but are less likely to realize synergy benefits than a strategic buyer. An MBI's financial capacity is often more limited, so they often rely on the seller for financing. This is often done through an earn-out arrangement, which can mitigate the risk for both the buyer and the seller.

Financial buyer

: Investment or private equity firms acquire companies to maximize their returns. They often hold multiple companies in their portfolio and seek to achieve synergy benefits by pooling resources or processes between companies. financial buyers They typically have sufficient financial resources to finance the acquisition and often offer a quick transaction. However, the purchase price may depend on the company's performance, with an earn-out arrangement included in the deal.