In selling a business there are two types of buyers: strategic buyers and financial buyers.
Strategic buyers look for companies that can enhance their current business.
Financial buyers look for companies that generate cash.
Their motivations and careabouts are different.
The strategic buyer will look to see how closely the acquisition is to the buyer’s business and how much work it will take to integrate it.
The financial buyer will look at the financials to determine the cash flow and how long it may sustain.
A company seeking a buyer will need to develop a relationship with CEO and VP-level contacts in the industry. This can be done through introductions, conferences, and other events.
The company may also find an avenue through the corporate development team in some cases.
Bankers are also potential conduits to potential acquirers.
The board of directors of the acquiring company may also provide an entry into the company.
Finding the buyer takes time and building a rapport takes even more time.
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Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.