How To Make Your Business Appeal To Strategic Buyers

We all know buyers are key to any business value and growth, but not all buyers are the same.

Strategic buyers are not your usual financial buyers. They offer way more value to the sale. So, how do you attract strategic buyers?

In this article, I will tell you all about strategic buyers and how to make your business appeal to them.

Who Are Strategic Buyers?

While a financial buyer is interested in the EBIDTA of your business, a strategic buyer looks for so much more. Besides the financial status, the buyer also analyzes how your business aligns with their current operations. Their prime focus is to expand by acquiring companies offering a different product line in the same industry. In a nutshell, strategic buyers are looking to expand and gain value while keeping the costs minimal and improving work efficiency.

Why Make Your Business Appeal to Strategic Buyers?

You are not planning to sell your business for the next 5 – 10 years, so why spend the effort attracting strategic buyers?

Firstly, they’re willing to pay a higher multiple. They can envision a greater business value than a standard financial buyer. They are ready to invest for a cost-effective and profit-oriented expansion. This takes years to set up. Let’s understand with an example. Suppose your company has:

  • A cutting-edge, subscription business model
  • Consistent growth in revenue and EBITDA year in and year out
  • A stable customer base
  • Systems that produce these results
  • A better business model for managed services

Let’s see the comparison between the two categories of buyers.

Your Current Business

With an EBIDTA of $5M, a potential financial buyer will offer a multiple of 6-8, making the purchase price $30-40M. On the other hand, a strategic buyer will be willing to offer multiples of 8-12, elevating the purchase price to $40-60M.

Business With ExitMaximizer Framework

With your EBIDTA placed at $12.4M, the financial buyer might offer a multiple of 6-8. This takes the purchase price to $75-99M. On the contrary, a strategic buyer will take this value to $99.2-148.8M, with a multiple of 8-12.

By incorporating the ExitMaximizer Framework, you earn not only a higher EBIDTA but also develop appeal for high-paying strategic buyers.

3 Ways to Make Your Business Appeal To Strategic Buyers

How does an additional $20M on your purchase price sound? Let’s get you there.

Here are three ways you can start attracting strategic buyers:

  • Study the buyer market: This will let you learn about what they are looking for and where your business position stands.
  • Keep robust financial records: They are one of the prime factors assessed by strategic buyers while making a purchase decision.
  • Proficiency of the management team and Information system: It must be adept and capable to run independently.

So, we learned all about strategic buyers and the ways in which you can make your business appeal to them.

Besides strategic buyers, the ExitMaximizer Framework significantly boosts your business worth. It can make the entire difference between retiring early or working till your 80’s!

Check out more about how you can use the ExitMaximizer Framework for maximum profit from my all-inclusive MSP Owners Guide to Increasing Growth & Business Value for free!

If you want one-on-one advice for implementing this strategy, feel free to book a quick 15-minute call with me on my calendar.

Rocco Musumeche