We are trying to decide whether to target strategic buyers or private equity firms for our eventual exit. How does the type of buyer we target change the operational prep we need to do on our exit runway?

Question

Tyler Smith · Accepted Answer

The type of buyer you target changes how you present and structure your business operations. Strategic buyers and financial buyers look at your company through completely different lenses.

Strategic buyers are looking for synergies. They want to buy your proprietary technology, your unique customer relationships, or your geographic footprint to integrate into their existing operations. If you are targeting a strategic buyer, focus your runway on documenting your intellectual property, optimizing your specialized core processes, and proving how easily your systems can integrate with theirs.

Financial buyers, such as private equity firms, are buying your cash flow and your stand alone management team. They want a self sustaining platform company that does not require day to day operational help. If you are targeting financial buyers, your primary goal is to build a highly functional leadership team. Your Accountability Chart must be filled with leaders who GWC™ their seats and can run the business without you.

Identify your target buyer early on your runway. This clarity allows you to align your quarterly Rocks toward either proving strategic integration value or demonstrating independent operational strength.