Key Information for Financial and Strategic Business Buyers

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Buying A Business

Whether you are a Financial Buyer (Investor) or Strategic Buyer there exists certain key information that will help you to maximise the rewards and minimise the risks associated with buying a business.

Generally this includes a clear and detailed understanding of the business to be acquired and its related risks; an objective assessment of your own background - specifically your skillset and temperament with regard to buying operating or managing the business; and knowledge of your own financial health - frankly assess if you are possessed of the wherewithal to both buy and operate the business.

The Difference Between Financial Buyers And Strategic Buyers (And How We Cater To Both)
Financial buyers tend to evaluate the purchase of businesses as brokers would evaluate the purchase of a stock on the market. They are not in the industry of the business for sale, and so, are only interested in a return on their investment. Therefore, financial buyers focus on cash flow and historic growth.
Strategic buyers are typically already active in the industry in which the business for sale operates. The goal of a strategic buyer is to identify business synergies from the businesses it acquires, such as increasing revenue and market share, expansion into new regions and economies of scale.

Because financial buyers are investors, they usually seek companies that are well-managed and have experienced management teams in place. Financial buyers scrutinize the financial statements of desired businesses in depth, focusing on earnings and the potential for earnings growth.

We understand that the unaided hunt for a business to purchase can be time consuming  and fraught with frustrations which is why we present tailored listings featuring location, description, amenities and summary financial figures. If this piques the interest of buyers/investors, they then have the option to contact the seller directly for more detailed information.

Sell The Business supports strategic buyers and investors by facilitating them to be proactive in their search for new opportunities. On the investors and buyers page of our website, interested parties can advertise under our “Businesses Wanted” section, outlining their requirements. Furthermore, investors and buyers can subscribe to our mailing list and receive tailored updates on businesses which match with their selected “area of interest”. This means they are always the first to be alerted when relevant new businesses for sale are listed.

A key tip we give to both forms of buyer is to gather as much customer data as possible. It is imperative to know if they would be brand ambassadors and recommend the product/service being offered. One approach to this data gathering is to utilise the Net Promoter Score (NPS) which breaks customers down into three categories: promoters who are loyal, will recommend a company’s products and services, and can help fuel growth; passives who are indifferent and easy pickings for competitors; and detractors who are unhappy and actively criticize. It’s a positive sign if the customer base of the business you’re considering buying/investing in is actively promoting its products/services.