Plenty of considerations have to be made when selling your business, and considering who will be at the negotiation table with you is among the most important. There are at least four types of buyers who are always ready to buy a business in Utah. Each of these buyers has different priorities and thus different goals and achievements in the business. Understanding these types of buyers should be the first step in your exit plan.
Strategic Buyers
Companies who pursue growth through acquisition of other businesses in line with their competitors are referred to as strategic buyers. These buyers only check the alignment of your business to their core strategy, and they are not bothered by your businesses financial situation. The major advantage of considering these buyers is that they offer a higher sale price. This is because they solely pay for the synergies, which make your company a natural fit to their business.
Private Equity
This category of private investors is always on the lookout for investments in various opportunity windows for reasons particular to their needs. Their needs can vary from getting cash flow for their businesses to simply wanting to become the owner and operator of a business. These buyers also have connections to various private equity groups, which makes it easy to market your business to a wide range of buyers.
Family Offices
These have a significant resemblance to private equity buyers, but they differ in critical ways that you should take note of. Family offices look into investing the money or wealth of a single family with the aim of focusing on the specific industry that got your business its fortune. The primary goal of these buyers is ensuring that your wealth rolls over to multiple generations. Note that family offices are not easy to find, considering that they only invest in cash and that their sale price is much lower than private equity and strategic buyers. However, if you are looking for industry guidance and direction, family offices are the best bet for you.
Holding Companies
Also referred to as shell companies, this category exists solely with the aim of owning up other companies. That means that these buyers do not offer any services or product of their own; instead, they generate their revenue from stock earnings and dividends out of their shares in other businesses. These buyers will often seek a controlling stake for your business, making it easy for you to cash in equity. However, you will now have to include other board members in decision making for your business.
While it is always easier said than done, your business consultant should always endeavor to increase the value of your company by getting a buyer who is willing to pay the highest possible amount for the business at hand. This works in the sense that when there are plenty of buyers investigating your business, the leverage turns from the buyer, having a wide range of opportunities to select from, to the seller being lost for choice on where to sell their business.
