There are normally three types of Buyers.


These are usually the most qualified. They almost always pay cash and buy at a premium. Their decision to buy usually revolves around considerations of economies of scale, new channels of distribution, new technologies and other integration considerations. To be attractive to a strategic buyer, your company should fit most of the following criteria:
• Sales usually in excess of $1million
• Proprietary product or process
• Unique market presence
• Synergistic fit with the buyer
• Suitable management willing to stay


By far the largest group of buyers and the most common for businesses valued at less than $2 million. These buyers tend to focus solely on present and past earnings and will not typically pay a price based on future earnings. The cash flow buyer will consider a price fair if the transaction meets the following criteria:
• Living wage typically commensurate with the initial investment
• Modest return on the cash investment
• Seller and/or third party financing
• Good fit with their skills and the opportunity to improve cash flow


The difference between this category of buyer and all others is the value of goodwill. That is, industry buyers won’t pay for it and are usually looking to acquire a company where the owner or the company itself is in some form of distress. The industry buyer typically will pay:
• Liquidation value
• Book value
• Adjusted book value
All too often business owners who are attempting to sell their business on their own end up dealing with an industry buyer.