The Market Place for the "Mid-Sized, Closely-held" Company

Just Who are the Buyers and How do They Differ?

When it's time to consider selling a company, every seller should consider and understand the different types of buyers that may be interested in purchasing it. Each type of buyer brings their own pluses and minuses to the table. At times a seller may not have a choice, but it's important to understand the reasons why each type may be interested in purchasing a company.

The current marketplace for privately held companies is comprised, essentially, of the following four types of acquirers:

The Strategic Acquirer

This type of acquirer is prompted by such factors as establishing new markets, cross-fertilizing technology, and vertical integration. Although economic considerations are evaluated, the reasons for acquisition are the result of long-term planning.

The Financial Buyer

The focus of this buyer is the return on investment and often attempts to invest the least amount of capital necessary. Emphasis is placed on historic and current conditions.

The Individual Acquirer

This buyer places primary emphasis on the ability to finance and leverage a purchase. This buyer typically comes from a large corporate background with their own capital or is backed by an investor group.

The Industry Buyer

This is many times, the buyer of last resort. If a sale is necessary, it is usually only the industry buyer who will come to the rescue. However, the industry buyer can combine facilities, consolidate overhead and use other means to increase efficiency and productivity.