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Strategic Buyers

Strategic Buyers defined:┬áStrategic buyers are acquirers of companies who are in a similar line of business as the acquired company, and are entering into a merger or acquisition (M&A) transaction for strategic reasons, such as expanding into a new geographic market, increasing existing market share, or adding an innovative new technology. Strategic buyers can also benefit from reducing overlapping overhead costs such as Human Resources, Finance, and others and make the combined new entity more profitable. Strategic buyers are the opposite of “financial buyers” (see PrivCo.com definition of “Financial Buyers”), who are investment funds who hope to profit primarily by rearranging the financial and capital structure of the acquired company (such as by taking on debt and leveraging their investment, cutting costs, and as soon as possible re-selling the company for a shorter term profit). A strategic buyer will typically incorporate the acquired company into its business operations and hold on to it for the long term, if not indefinitely.

Above is a definition for “Strategic Buyers” from PrivCo’s Private Company Knowledge Bank, the definitive online and e-book guide to private companies and private company deals.

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