Who would buy my business?
Many CEOs feel they already know their likely buyers. Exploring and building a broader Buyer Universe will likely unearth new prospects and enable you to leverage a stronger sale outcome.
By Tom Imlay
3 minute read
The potential buyers of your business, or the ‘Buyer Universe’ as we like to call it, is often broader and deeper than might first be appreciated. The range of options for a seller can be overlooked due to engaging in a reactive process or simply not having the time to consider why another company would buy your business.
Start with assets and capabilities
An investigation into potential buyers should start with understanding the assets and capabilities in your business. If you understand these, then you know what is valuable to a buyer. Do you have a scalable software product? Is one of your markets a high growth market for the next 10-15 years? Is your recent revenue growth in a territory where you have a competitive advantage? Do you have a customer base that generates significant gross profit with next to zero churn? These are critical questions. A company will buy your business when it sees value in your assets and capabilities.
Set the Buyer categories
Once you understand your assets and capabilities, buyer categories can be created. Direct competitors should be just one of several buyer categories. Imagine you’re an infrastructure consulting company; other buyer categories could include generalist strategy consultancies, construction companies, facilities or property management companies, global PEs, infrastructure management companies and climate focused companies. Why would a climate focused company buy your business? If you have a sticky customer base that is likely to need climate-based solutions in the future, it would be a significant asset for a climate focussed company looking to scale its growth.
Take a deeper dive
Once you have your buyer universe mapped out in terms of the overarching categories, how do you then identify specific prospects in each category? Potential buyers can be assessed based on how acquisitive they are, their strategic priorities, and the level of engagement you currently have with them. A company that has a clear acquisition focus for growth that you are currently in partnership with is an obvious acquirer for your business. Another company looking to penetrate your geographical market (for example; by acquiring a specific strategic capability that you have) also has a strong rationale for acquiring you.
Your business could be bought by many types of business. Buyers will be interested in your assets and capabilities, particularly when they believe they can arbitrage value. Less obvious acquisition options such as those for pure diversification or tax reasons should not be ignored. Answering who will buy your business requires proactivity, self-awareness (more specifically, business awareness) and deep research to uncover your Buyer Universe.