Types of Business Buyers | Sell My Business
Business buyers come in all shapes and sizes. Some are motivated by the desire to make a quick buck, while others are looking for a long-term investment. Regardless of their motivations, it’s important for business owners to understand the different types of business buyers in order to tailor their sales pitch accordingly.
An example of why this matters is illustrated by a recent study on business buyers in California. The study found that out of all the business buyers in California, the ones who were most likely to buy a business were Baby Boomers and Generation X. This is significant because Baby Boomers and Generation X are typically looking for businesses that are established and have a proven track record. So if you’re a business owner who’s looking to sell in California, it’s important to focus your sales pitch on attracting Baby Boomer and Generation X business buyers.
Types of Business Buyers
Each buyer who inquires about your business when it is for sale will probably have their unique reason for wanting to buy. By talking with the buyer, understanding their needs, and then placing them in one of the categories below, you can understand what they are looking for so you are better prepared to discuss and negotiate the transaction.
This is generally one person with good financial resources and background or experience in managing and leading a particular business in a particular industry. This type of buyer is usually looking for a particular business that is financially healthy. They are looking for a return on their investment and some flexibility in lifestyle choices. They also believe they can buy and at least maintain the current performance of the business or take it to a higher level.
Corporate Executive Buyers
This is a buyer who has many years of service with a large corporation and has concerns that downsizing may occur. In some cases, they are getting older and have their retirement money tucked away and would like to see what it would be like to run their own business. Franchise businesses are particularly attractive to them as they like the structure and organization that comes from working in this business model.
Existing Employee Buyers
The buyer of a business can be an existing employee. If the business has strong cash flow and the employee can put together a small down payment with the seller carrying back some of the financings, this can be a mutually beneficial arrangement. SBA financing may be an option here—especially if the employee has management expertise.
Investment Buyers or Financial Buyers
All buyers want a return on their investment. However, with investment or financial buyers, this is their primary motivation. Their ability to get financing on an as large part of the purchase price as possible is also motivating. They have less interest in the type of industry and many of the specifics of the business operation.
This is usually a company and their purpose of buying the business is their belief that joining the two companies will produce more, or be worth more, together than if the two companies were to remain separate.
This type of buyer is often a competitor or owns a very similar operation. They know the industry well and therefore see little value in paying for the expertise and skill of the seller.
Like the synergistic buyer, the strategic buyer is usually a business owner expanding their current company. They leverage their expertise to enter into new markets by acquiring market share and then increasing market share through the acquisition. Their strategy can also include deploying new technology and/or eliminating a competitor or some competitive element.
By understanding these different types of buyers – knowing what buyers are looking for, finding out what they’re willing to pay, looking for buyers in the right places, and negotiating the best price – you can increase your chances of finding the right buyer and getting the best price for your business.
Are you ready to sell or need some help deciding? Contact us today at this toll-free number (844) 414-9700 or simply email us at firstname.lastname@example.org
Rogerson Business Services: Why Hire Their Expertise
Overall, by working with a qualified business broker during your sell-side process and strategic due diligence, you can feel confident that all aspects of selling your business in California will be handled with care and expertise.
With their help, you will be able to sell your business at top dollar. Here are some of the valuation tactics that Rogerson Busienss Services, expert brokers in California help you achieve your goal:
- How To Increase Company Valuation? 4 Value Drivers You Need To Know
- What is Quality of Earnings Analysis: Sell a Business Due Diligence in California
- Adjusted Financial Statements When Selling a Business in California
- SDE Adjustments To Make Before Selling a Business in California
- How Do I Calculate The Value Of My Business To Sell In California
- What is My Business Worth? | Valuing and Selling Your Business
- How Much is a Business Worth to Sell | Determine Business Worth
- Income Approach Valuation | Finding Business Worth Easy
- How To Value A Business Quickly: Best Business Valuation Formula
- Seller’s Discretionary Earnings (SDE) Valuation | Selling a Business in California
- Financial Due Diligence When Selling a Business
Do you have any questions about how to value a company? Leave a comment below and we’ll be happy to help!
If you are thinking about valuing and selling your business in California, then working with a broker is a great option. A broker can help you get the best price for your business by doing things like valuing your business correctly, finding the right buyer, and negotiating the best terms. If you are ready to sell your business, contact Rogerson Business Services today.
Andrew Rogerson is a certified business broker based in Sacramento, California. Call Toll-Free at (844) 414-9700 or email him at email@example.com services the whole state of California.