Section III: Striking a Deal
Driving forces: what motivates buyers
What motivates someone to buy a business? Whether you are a buyer or seller, understanding the driving factors will be vital to negotiations. We spoke with Wise, who explains that buyers can be divided into two categories: financial buyers and strategic buyers.
Financial Buyers, says Wise, are people who want to buy a business to increase their assets. They may be looking for a good investment or have a personal interest in a particular company. Financial buyers aren't necessarily looking for a business where they will spend a lot of time taking care of the day to day operations.
Strategic Buyers are motivated by a desire to participate in a particular market as a business owner. Some want to buy a business because they have always wanted to be their own boss, while others look at the purchase as a strategic tactic taken to improve the success of an existing venture. For example, a strategic buyer might buy out a competitor in order to consolidate marketshare or increase in size and scope.
While strategic and financial buyers are each motivated to buy a business for different reasons, both want the best possible price, says Wise.
