Generating Multiple Buyers

It has long been recognized in the Merger & Acquisition market that “having only one buyer is the same as having no buyers.” For the seller of a business, having multiple buyers is an absolute requirement to maximize the sales value of an owner’s business. But just how does the M&A Professional bring multiple buyers to a sales transaction?

The M&A Specialist will develop a Confidential Information Memorandum (CIM) designed to engender competition among potential buyers. The CIM reflects sales and marketing strategies to efficiently, effectively and confidentially attract “Qualified Buyers” from two major groups:

  • Financial Buyers – typically identified as investors interested in the return they can achieve by buying a business.
  • Strategic Buyer – traditionally in the same business or industry as the seller.

These groups may include:

  • Private Equity Firms, who generally raise capital, invest with various strategies in operating companies and attempt to maximize returns in accordance with various criteria.
  • Operating Companies, who are in the same business or industry seeking new markets, products and services.
  • Individuals with the resources to invest and are willing to examine different types of businesses or industries.

The distinctions between financial and strategic buyers may be numerous and significant; however, persistence may be the most important quality your professional possesses to develop multiple “Qualified Buyers” for the sale of your company.