I want to spend just a little time on what’s called a strategic buyer. Both a PE firm and an MA firm work with strategic buyers. A strategic buyer is when one company buys another. There can be many reasons that a business owner may get an offer from a strategic buyer. The strategic buyer may want to expand their operations and geography, like the metal fabrication shop we discussed earlier. Or perhaps the company being acquired has a product or service that benefits another company the strategic buyer owns. Sometimes, it’s as simple as wanting to acquire competition to grow and expand.
It can work great, but with a strategic buyer, please understand that you can drastically reduce staff. Because a strategic buyer has their own internal accounting division, yours may disappear. No division or employee can be safe when this happens. It’s not done with any malice. It’s just that the new company aims to maxi- mize efficiencies and may not need the old company’s systems or employees.
There are so many variables involved when you are selling a com- pany. You have to do your homework on the company that’s offering to buy yours. If you’re not comfortable, it’s okay to walk away. But as I discussed in the previous chapter, this is exactly why you need a team to help you make an informed decision and determine the type of sale that is going to work best for you as well as the business you created. Again, hire a professional, preferably one who has a tremendous amount of experience successfully helping his clients navigate these waters.
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