Selling a business

Guide: Who Will Buy Your Business?

Most buyers fall into three groups: individuals, strategic buyers and professional investors. Which group fits your business depends mostly on its size.

Summary

Who it's for

Business owners thinking about selling who want to know who is most likely to buy.

Three buyer types

Individual buyers, strategic buyers and professional investors.

What decides it

Mostly the size of your business. The bigger the price, the smaller the group of possible buyers.

Reaching buyers

Business sale websites for smaller businesses, and direct, confidential outreach for medium-sized and larger ones.

Why the Buyer Matters

When you decide to sell your business, one of the first questions to answer is who is most likely to buy it. The answer shapes almost everything that follows. It affects how the business is marketed, where it is advertised, how long the sale might take and what kind of conversations you will have along the way.

In our experience, buyers fall into three main groups. Which group is right for you depends mostly on the size of your business.

The Three Buyer Types

Buyer type 1: Individual buyers

If you own a small business like a cafe, restaurant or corner shop, your buyer is most likely to be an individual. These are often called "mum and dad" buyers.

They are everyday people who want to own and run their own business. They usually pay for it in one or more of these ways:

  • Using their own savings
  • Borrowing against their home through a bank loan
  • Using money from family
  • Selling other investments, such as shares

Many of these buyers are entrepreneurial. They may be leaving a job to work for themselves, or they may have run a small business before and want another one. They will often work in the business day to day, so they care a lot about the lifestyle it offers as well as the money it makes.

Buyer type 2: Strategic buyers

A strategic buyer is another business that wants to buy yours because it fits with what they already do. They are not just buying a stream of income. They are buying something that makes their own business stronger.

Because your business may be worth more to them than it is on its own, strategic buyers can sometimes be willing to pay a stronger price.

Strategic buyers can include:

A competitor

A business that does the same thing as you and wants to grow, win your customers or remove a rival.

A business up or down the value chain

A supplier you buy from, or a customer you sell to, who wants more control over their supply chain.

A business in a related industry

A business that sells different products or services to the same kinds of customers.

Buyer type 3: Professional investors

Professional investors buy businesses as their full-time job. They are experienced, they have money ready to invest and they follow a careful process before buying.

This group covers a wide range of buyers, including:

  • Wealthy individuals: people with a lot of personal wealth who invest in private businesses
  • Family offices: private companies set up to manage and grow a wealthy family’s money
  • Private equity funds: funds that buy businesses, grow them over a few years and then sell them again

These investors usually look for larger, well run businesses with steady profits and a good team that can keep things running without the owner.

Why the Size of Your Business Matters

The number of people able to buy your business changes a great deal depending on its price.

The bigger the price, the smaller the group of possible buyers.

This is not a reflection on the quality of a larger business. It simply comes down to how many people and organisations have access to that much money.

A $200k cafe

If you are selling a cafe for $200k, there could be hundreds of people across Australia who are interested and have the money to buy it. Plenty of people have that level of savings, or can borrow it against their home.

A $20m business

If you are selling a business for $20m, the pool of buyers is very different. There might only be a handful of buyers in Australia and overseas who are both interested and able to pay that amount.

How We Find the Right Buyers for You

Because each type of buyer looks for businesses in a different way, we use a different approach depending on the size of your business.

Smaller businesses

For smaller businesses, where most buyers are individuals, we advertise on business sale websites such as Seek Business, BSale and AnyBusiness. These work much like realestate.com.au or Domain do for houses. Buyers browse the listings, find businesses that interest them and make an enquiry. This lets us reach a large number of potential buyers quickly.

Medium-sized businesses

As businesses get bigger, we start to contact strategic buyers directly. We work closely with you on this, because you often know your industry better than anyone. Together we put together a list of competitors, suppliers, customers and related businesses that might be a good fit, and then we reach out to them on a confidential basis.

Larger businesses

For very large businesses, we contact professional investors and large strategic acquirers directly. We have built relationships with a range of these investors, so we can go straight to the people most likely to be interested.

A Quick Summary

Individual buyers

Who they are: Mum and dad buyers using savings, a home loan or family money.

Typical business: Cafes, restaurants, corner shops and other small businesses.

How many buyers: Often thousands.

How we reach them: Online listing sites like Seek Business, BSale and AnyBusiness.

Strategic buyers

Who they are: Competitors, suppliers, customers or related businesses.

Typical business: Established businesses that fit with what the buyer already does.

How many buyers: A smaller, targeted group.

How we reach them: Direct outreach, worked out together with you.

Professional investors

Who they are: Wealthy individuals, family offices and investment funds.

Typical business: Larger, well run businesses with steady profits.

How many buyers: Only a handful.

How we reach them: Direct contact with investors we already know.

The Bottom Line

Knowing who is most likely to buy your business helps you plan a sale that makes sense. A small business will usually suit an individual buyer, and there will often be plenty of them. As businesses grow larger, the buyers become fewer and more specialised, so the approach needs to be more targeted.

Where to Start

If you are thinking about selling and would like to know which type of buyer is the best fit for your business, we are happy to have a chat. You can also start with a free, confidential appraisal.

Thinking about selling?

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