All buyers are not the same. A strong advisor should illuminate their seller about the different types of buyers. It is critically important to align the type of buyer with the defined objectives of the seller.
There is a small percentage of sellers that do not care about anything except money. Their only instruction is “go get me the most money possible”. They do not care about their employees, customers, legacy or any other aspect of their company.
As a firm we do not accept that type of client. They are the worst sellers and their intent becomes crystal clear to the buyers. Would you want to buy a company from someone like this? The only ones that do are the ones that think the exact same way and those are buyers that we do not want to work with either.
We are a Christian firm and our purpose is to connect very high-quality sellers with very high-quality buyers. In that model they both have the best interests in the company and its employees. A company sale should not be an adverse event for the employees and often times it is the opposite. In a highly successful sale, it creates new opportunities for the employees within a robust and invigorated environment.
There are several types of buyers.
- Individuals – typically high net worth individuals or successful entrepreneurs.
- Strategic – these buyers are typically already in the industry and are seeking growth, expansion of their offering models products or services or expansion of their geographic footprint.
- Family Offices – these buyers are typically managing a great deal of wealth and they are very sophisticated acquirers. They tend to be buy and hold acquirers.
- Private Equity – these buyers are also called “financial buyers” and everything in their operating orbit is driven by current and projected economics.
The best buyer for a specific seller depends completely on the seller’s objectives.
We have found that the best way to navigate the buyer landscape is to secure at least five offers for our clients. This typically provides our clients with a cross-sectional view of the types of buyers.
Many times, it is quite an enlightenment for our sellers. It usually results in polarizing responses such as I would never sell my company to that buyer or I loved everything I learned about that buyer. They would be an outstanding steward of my company going forward.
The good thing is that most buyers are very transparent about their style and culture. This gives sellers a great line of sight into the trustworthiness and culture that a buyer brings to the table. This is especially important if an earnout is involved.
This is where we step back as our client’s advisor and let them use their experience, judgement and intuition to select the buyer that they conclude is best for them and their company.