The buyer archetype grid

Different buyers pay for different things. Pick the ones who pay for what you have.

The idea

Different buyers pay for different things. Pick the ones who pay for what you have.

A strategic acquirer pays for what your business does for theirs. A private equity platform pays for what it can build on you. An add-on buyer pays for what you add to something they already own. A family office or independent sponsor pays for durable cash flow.

The best process brings several types into the same room, because each will value a different part of the business.

The three P’s

Where this chapter sits

Pull one lever and you improve the outcome. Pull all three and you change it.

P1

Positioning

Which category. Where in the range.

P2

Pre-emption

Find it first. Frame it first.

P3

Process

Competition. Timing. Leverage.

Read the three P’s

The figure

Four buyers, four reasons to pay

Build and resellTheir plan for the businessHold and operate

Private equity platform

Buys a base to add on to. Pays for management, systems, and a repeatable model. Wants rollover. Exits in four to seven years.

Private equity add-on

Buys what fits a platform it already owns, through a portfolio company. Pays for geography, capability, or customers. The fastest close; may pay above the range for the right fit.

Family office, independent sponsor, or search fund

Buys durable earnings to own for a long time. Pays for stability, less for growth. Often flexible on structure.

Strategic acquirer

Buys a capability, a customer base, or a competitor. Pays for synergies it will not share with you unless made to. The slowest diligence; the highest potential price.

Cash flowWhat they are buyingStrategic fit

How to read it

Four buyer types placed by whether they value cash flow or strategic fit (horizontal) and whether they will hold the business or build and resell it (vertical). Each type pays for something different, which is why a process should include more than one.