Buyers Active in
Today's Marketplace for
by: Theodore P. Burbank, FCBI
The current marketplace for private companies is made up, essentially, of four types of
acquirers. An outline description of each is as follows:
The Strategic Acquirer
typically a large firm, usually a Public Company
accustomed to long term planning
economic considerations are evaluated, however, reason for
acquisition is not always purely economic.
acquisition prompted by factors such as establishing new markets.
The Corporate or Sophisticated Acquirer
typically comes from a large company background
employs "schooled" approach when determining value
usually a high net worth individual, a group of individuals, an investor group, or a
focuses on current and future, rather than past
places primary emphasis on capitalization of earnings, and on the ability to finance and
leverage a purchase.
The Financial Buyer
usually an individual
primary focus on income replacement and the opportunity to build equity
major emphasis placed on historic and current conditions.
case for case, the perception of risk is likely to be higher than that of the strategic
or corporate style acquirer.
The Industry Buyer
usually from within the same, or affiliated, field as the company.
primary focus is on a business' fixed assets.
presumes that they will bring virtually all other value to the enterprise.
A full description is found in "In & Out of
Business . . . Happily"
Burbank is President of Lighthouse Financial, LLC and since 1979 he and his
associates have consulted with and provided valuation, marketing
and sales assistance to more than 2,000 family and private business owners.
He is the author of "In & Out of Business . . . Happily" -
"Buying a Business Made Easier" - "VALUware 6.0" Business
Valuation Software - "DealMaster 4.0" Business Acquisition Software -
"DealMaker docs" Transaction Documentation Software all published by
Parker-Nelson Publishing. In
addition he is a contributing author to "Merger and Acquisition Handbook
for Small and Mid-Size Businesses" and "Business Valuation
Handbook" both published by John Wiley and Sons
and has written many articles on business sales and valuations. He
has conducted seminars and addressed many trade associations in the US, Canada
and abroad. Ted
is available for private consultation, valuation and acquisition assignments.
He may be reached by telephone: 508 794-1200 or by email: firstname.lastname@example.org