Business buyers come in all shapes and sizes. Some are motivated by the desire to make a quick profit, while others are seeking a long-term investment. Regardless of their motivations, business owners must understand the various types of business buyers to tailor their sales pitch accordingly.
An example of why a recent study on business buyers in California illustrates this matters. The study found that among all business buyers in California, those most likely to purchase a business were Baby Boomers and Generation X. This is significant because Baby Boomers and Generation X are typically seeking established businesses with a proven track record. If you’re a business owner looking to sell in California, it’s essential to tailor your sales pitch to attract 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.
Individual Buyers
This is typically one person with good financial resources and a background or experience in managing and leading a specific business within a particular industry. This type of buyer is typically seeking a financially stable business. 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 buyer has extensive experience with a large corporation and is concerned that downsizing may be on the horizon. In some cases, they are getting older and have their retirement money set aside, and they would like to see what it would be like to run their own business. Franchise businesses are particularly attractive to them because they appreciate the structure and organization that come with 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 make a small down payment, with the seller carrying back some of the financing, 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 for as large a 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.
Synergistic Buyers
This is usually a company, and its purpose for buying the business is based on the belief that combining the two companies will produce more, or be worth more, together than if they were to remain separate.
Industry Buyers
This type of buyer is often a competitor or owns a very similar operation. They are familiar with the industry and therefore see little value in paying for the seller’s expertise and skill.
Strategic Buyers
Like the synergistic buyer, the strategic buyer is usually a business owner expanding their current company. They leverage their expertise to enter new markets by acquiring market share and then expanding their market share through subsequent acquisitions. Their strategy can also include deploying new technology and/or eliminating a competitor or some competitive element.
Final Take
Selling your business to the right buyer by attracting multiple buyers doesn’t have to be difficult.
By understanding the different types of buyers – knowing what they are looking for, determining their willingness to pay, identifying buyers in the right places, and negotiating the best price – you can increase your chances of finding the right buyer and securing the best price for your business.
Are you ready to sell, or do you need some help deciding? Contact us today at this toll-free number (844) 414-9700 or simply email us at support@rogersonbusinessservices.com
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 Business Services, expert brokers in California, can 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 valuing a company? Leave a comment below and we’ll be happy to help!
Conclusion
If you are considering valuing and selling your business in California, working with a broker is a great option. A broker can help you get the best price for your business. This includes accurately valuing your business. It is crucial to have success in 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 Lifetime Certified Business Broker based in Sacramento, California. Call Toll-Free at (844) 414-9700 or email him at support@rogersonbusinessservices.com. Rogerson Business Services assists throughout the whole state of California.