Types of Business Buyers

Types of Business Buyers

Making the initial decision to sell one’s company is tough, but once that decision is made, there are a number of different options for potential buyers. Small and medium-sized businesses are more sophisticated than ever, and the parties purchasing these businesses can come from various backgrounds. In my next few blogs I will write about the most common categories of business buyers that we see, starting with members of one’s own family.

Family Members

People within a business owner’s own family may express interest in buying the family business. In fact, a family member is one of the more common types of small business buyers. One reason for this is that a business owner is often more comfortable with a relative taking over the prized business that he or she may have built from scratch. In many situations, the family member looking to take over the family business has been carefully groomed and tested over the years. In this kind of situation, the family member may be the best person to buy the business.

However, there is a downside. Family dynamics can be quite complex, and a variety of conflicts may develop. Issues may quickly arise ranging from whether or not the founder can really leave the business, to whether or not the buyer/family member actually has the funds to make the purchase and the skills to run the business successfully. These, and similar issues, can cause significant disruption in the transaction of the sale. In short, families come with histories and complex, internal issues. As a result, selling to a family member can lead to discord within the family. For this reason, an outside buyer may be the best option. When it comes to determining whether or not a family member is the right buyer for a given business, it is necessary to look at three vital issues:  professional ability, financial capability, and the agreement among members of the family.

In my next posting I will write about selling to a competitor.