The Five Kinds Of Buyers Involved In Any Business Sale

Amongst the many modern approaches towards seller and buyer relationship, there are five different types of patterns in buyer behavior that stand out.

These are determined by the ways in which people relate various factors concerning the purchase. With that in mind, here are the types of buyers you can expect to run into when selling a business

The Individual Buyer:

This category of the buyer is the most common. This buyer is an individual making a purchase with little or no influence from others and who has a number of financial resources. This kind of buyer typically has the required experience and background necessary to lead a particular operation. An individual buyer usually is in pursuit of a business that is financially healthy, indicating a sound return on the investment in terms of both money and time.

The Strategic Buyer:

This kind of buyer is a company, and their main focus is goal-oriented. With a clear vision and a specific goal in mind, they focus on entering into new markets, increasing market share, gaining new technology, and eliminating some element of competition. For example, say a company from Michigan bought a local grocery franchise. Then, this company would be a strategic buyer with two major goals: instant and far-reaching penetration into the grocery business, and a network of other businesses for sale in Michigan. As conceived, it is expected that the value-creation from this combination will mostly be seen in sales synergies in the early stages and then both in sales and distribution synergies over time.

The Synergistic Buyer:

A synergistic buyer, just like the above strategic buyer, is a company. Synergy is the concept that the value and performance of two companies combined will be greater than the sum of their individual parts. This is a term that is most commonly used in the context of mergers and acquisitions. Synergy, or the potential financial benefit achieved through the combining of companies, is often a driving force behind a merger. Hence, profit is a major force driving synergistic buyers.

The Industry Buyer:

Industrial buyers are a discrete business, government agency, or associations who make purchase decisions regarding services, raw materials, product components, or finished goods. So, they are also called organizational buyers. Industrial buyers are highly but not solely motivated in their buying decisions by profit objectives. What motivates them are the personal objectives, and thus they require different marketing strategies than other buyers.

Sometimes they are even known as “the buyer of last resort” because these buyers usually know the industry well and so often don’t agree to pay the asking price that the seller is offering.

The Financial Buyer:

This kind of buyers is primarily interested in the amount of return they can extract from that acquisition. A financial buyer is different from a strategic buyer in that the latter’s focus is on the evaluation of an acquisition, primarily on how it fits within a company’s strategic goals. A strategic buyer, for example, might acquire a company because that company has a superior distribution network or has products or geographic territories that are complementary. The target company’s financial condition would, therefore, be a secondary consideration, which is just the opposite in the case of a financial buyer.

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