Blog Page

Potential Buyer Types When Selling a Business

By May 15, 2019 No Comments
buyer types selling business

When you’re selling any kind of product or service as part of a business, it’s vital to think about the types of clients who are purchasing these products and services. Not only does this help you market things properly, it allows you to assess these various groups and tailor your products to them.

At Utah Business Consultants, we’re here to tell you that when selling your business, the same theme should apply (in slightly different ways, of course). Selling a business is a process that should include assessing the possible buyer types that might be out there, plus what you can expect from each type and how you should plan to work with them. Here are some of the most common business buyer types:

Family Members

In many situations, you’ll plan to sell the business to a family member and will not open up the sale to other parties. These situations can be highly beneficial for many reasons, from the familiarity family members should have with the business to an understanding of core principles. From a day-to-day perspective, selling to family often offers the smoothest transition for employees and clients alike.

At the same time, it’s important not to let certain tricky family dynamics get in the way. What if you’ve been grooming a family member to eventually take over the business, but it’s become clear recently that they aren’t qualified or don’t want the job? What if a family member who had planned to buy the company no longer has the assets to do so? Consider these pitfalls well in advance.

Market Competitors

Another very common business buyer is a competitor from within the same industry. Many business owners look to their competitors first when selling, knowing that they’ll be familiar with the business and will understand its value.

One vital consideration if you’re in negotiations with a competitor during a sale: A confidentiality agreement. If things happen to go south with the negotiations, you want to be legally protected.

“Synergistic” Buyers

Similar to market competitors, but with one catch: Synergistic buyers are those who have a business that’s similar to yours or complements it, and look to buy yours to fold it into one more effective company. Some of these arrangements will allow all employees from both sides to remain, while others may include some personnel changes.

Individual Vs. Financial Buyers

These two groups are similar, but not identical. Some individuals will purchase business with their own assets, sometimes to fulfill a lifelong dream of owning one or sometimes to apply their lifetime of business knowledge. In other cases, individuals will purchase businesses for purely financial reasons – these buyers will be primarily concerned with generating proper revenue so they can create profits.

For more on the kinds of buyers you may encounter during a business sale, or to learn about any of our exit planning or business brokerage services, speak to the staff at Utah Business Consultants today.