There are multiple avenues available when selling your company and several different types of buyers. The two basic types of buyers are strategic and financial.
Strategic buyers are companies who tend to be in your industry or would like to be, and wish to grow their business either strategically, structurally and/or geographically.
Large corporations are under a lot of pressure to increase sales and profitability and only so much can be attained through organic internal growth. Therefore, in order to meet their goals, the acquisition of middle market businesses has become a very important part of their growth strategy. Once a company identifies an acquisition target that it needs or wants, they usually pay the price necessary to acquire it and the process moves fairly quickly. In most instances, the Strategic buyer acquires 100% of the business and the owner, after transition occurs, can go off into the sunset to begin their next phase of life.
However, what if you want to have more personal time to start enjoying your life now, but you’re not ready to retire. Perhaps you feel your company has tremendous potential for growth and you don’t wish to sell and leave all that money on the table, but you need human resources and capital to attain it. A partial sale to a financial buyer could be the appropriate choice for you. Depending on the management team in place and the owner’s desire, the financial buyer may have them stay to run the day-to-day or take an advisory role, helping to guide the company at a high level. Either way, this allows the sellers to maintain a substantial stake in their company, while not being alone when dealing with all the issues of running and growing a business. These financial buyers usually work with the seller to build their company for 3 to 5 years and when the company is sold once again, the original owners receive a second bite of the apple by selling their retained ownership on the second sale. In many cases this can be as much, if not more, than the original sale amount in terms of monetary payment.