Series 79: 12.1.1. Assessing The Buyer’s Goals And Resources

Taken from our Series 79 Online Guide

12.1.1. Assessing the Buyer’s Goals and Resources

Additionally, the buyer’s general approach will be dictated by whether it is a financial buyer or a strategic buyer. Financial buyers such as private equity (PE) funds have a straightforward strategy: generate the greatest returns on investment, using leverage to do so when possible. If the numbers on a deal don’t pencil out, the financial buyer generally won’t pursue it.

The strategic buyer has different concerns. This type of buyer is looking for a business that provides a strategic fit in the long-term, and it may be willing to pay more for that business than a financial buyer. The nature of the strategic buyer’s interests varies; for example, it may be looking to expand into a new line of business or geographic region. The buy-side adviser may need to conduct a “buy versus

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