Identifying the best buyers of a business.

Employees, family members and friendly competitors are typically NOT the best buyers of a business

• It is a common misconception that those most knowledgeable about a business will pay the highest premium.
• Often, however, optimal buyers will come from unlikely sources, locations and industries.

Understanding types of buyers

• There are two types of buyers, i) economic buyers, who are solely interested in generating financial returns, and ii) optimal buyers, who recognize the strategic and financial merits of a transaction, and thus will be inclined to pay premium value.

Optimal buyers pay PREMIUM prices

• When assessing the purchase of a business, optimal buyers look beyond mere economic value, and focus on the strategic and financial pro forma benefits of the transaction. The potential to accelerate strategic and financial goals is the driving factor that motivates optimal buyers to pay premium prices.

Optimal buyers are often from an outside industry

• Optimal buyers typically include large domestic and international publicly traded corporations seeking companies that facilitate their entry into new markets, offer product diversification or accelerate revenue growth.
• With constant pressure from Wall Street to consistently and predictably grow earnings, optimal buyers seek acquisitions to enhance their growth.

Aligning buyer and seller interests

• Understanding and aligning the needs and wants of a seller and a buyer are of critical importance in a transaction.
• It is important to properly understand the strategic and financial merits of a potential transaction early in the process. Equally important, a business owner should have a clear idea of governance and management succession requirements.

A business owner is typically at a disadvantage when selling a business

• Many business owners believe that they are capable of properly and optimally executing the sale of their business.
• For most business owners that are selling a business, however, the sale of their business is their first experience in an M&A setting. Buyers of businesses, conversely, typically have significant experience in negotiating, structuring and valuing transactions.
• Business owners who attempt to sell their business on their own are almost always at a disadvantage when going up against seasoned deal professionals.

Generational Equity's team is among the highest ranking of M&A advisors

• Our associates collectively have decades of experience executing the most successful M&A transactions. We maintain a powerful and expansive network of financial and strategic buyers. We help business owners seeking an exit to identify, qualify, select and successfully negotiate with optimal buyers capable of paying maximum value.

¹Source: MergerStat