Broker Check
Exit Strategies: Strategic Buyer

Exit Strategies: Strategic Buyer

November 18, 2021

We’re continuing a series on options for those looking to transition their business by briefly discussing strategic buyers.

The strategic buyer typically has a business in the same or similar industry interested in vertical or horizontal (geographic, etc.) expansion as well as utilizing synergies created by their purchase or merger.  Strategic acquirers look for companies that can add new technology, expand a service line or help to them grow through their process or workforce capabilities.

Advantages of selling to a strategic buyer:

  • Higher Valuation: Might be willing to pay a premium given potential synergies between the two companies
  • Access to larger funds: If the strategic possesses the ability to issue stock as a part of the transaction
  • Long-term Vision: The strategic acquirer isn’t likely looking to flip the business in 3-5 years, rather merge into their operations for the longer term

 Potential disadvantages of selling to a strategic buyer:

  • Layoffs: The synergies mentioned above sometimes include cutting redundant employee positions
  • Sharing Secrets: Legal precautions are taken – but the process could include sharing sensitive information to a competitor
  • Legacy: The strategic company’s brand and legacy will likely overtake that of the acquired company

Either way we recommend hiring an M&A professional to discuss all of the possibilities when exiting a business.

If you or your clients are contemplating a transaction, please reach out and we can help begin to facilitate those discussions.


Matt and Andrew