What is a ‘Buyer’?
By Ed Pendarvis
Generally, the market consists of 5 types of buyers:
- An individual entering the ‘entrepreneurial world’ is making the decision to become their own boss. They will normally use their life savings or the equity of their home to finance their venture.
High net-worth Individuals
- Typically, someone that comes from a large company background is usually a high net-worth individual, group of individuals or an individual backed by an investment group. They place primary emphasis on capitalization of earnings and on the ability to finance and leverage the purchase.
- A competitor or similar business that can combine manufacturing facilities, consolidate overhead and utilize each others sales force to increase efficiency and productivity. Usually they are buyers of last resort.
- Economic considerations are evaluated; however, reason for acquisition is not purely economical but rather long-term planning. Acquisitions are prompted by factors, such as establishing new market, cross-fertilization technology and vertical integration.
M & A
- Equity Partners have the ability to bring an infusion of capital into a specific business, hoping to capitalize on the ability to combine strengths, technology, experienced personnel, in place marketing systems, while benefiting immediate market presence
What EVERY BUYER Should Know
At Link Business, we are advocates of finding a business that you like and would feel comfortable managing. You, like every other prospective buyer, have a vision of being your own boss and calling your own shots. A business must fit you visions in order to be successful.
An old saying in the Real Estate industry is “The 3 most important things a buyer shold look for are location, location and location.” While location is important to a business buyer, be aware that track record and management round out the 3 components of a successful business.
Let’s assume that you find a business that you like and its location is fine, however because of poor management, the business may not show the ggreatest track record. Purchased for the right price and on the right terms, this business could become more successful with proper management, making it a good way to achieve your vision of being a successful business owner.
As a prospective business buyer, you will be concerned as to why the business owner is selling business. Business owners sell for a variety of honest reasons. Besides the ovvious reasons of retirement, bad health or relocation, many sellers simply tire of doing the same thing and want to move on. It it is a good business for you, the reason for the sale doesn’t matter.
Finally, remember that somethines businesses are listed for maore than they are worth. So, if it’s a business you like, don’t be afraid to make what you consider to be a fair offer
Remember, your Link Business Broker is a well-trained professional who knows how to buy a business. Utilize your broker’s talents and call him/her whenever you need assistance or have questions about the process.