What is the difference between financial and strategic buyers?

Edited by Admin

Financial buyers are investors whose primary goal is to achieve a high rate of return on their investment. These investors typically buy a business and hold it over a medium term before exiting the investment. While in charge, these buyers may focus on revenue growth and cost-cutting to increase profitability. Meanwhile, strategic buyers are generally corporations which acquire companies that will help the company achieve its long-term strategic goals. They are often willing to pay a control premium if they expect to generate quantifiable synergies. Often times, financial buyers like PE firms may acquire a company for strategic reasons. In addition, there is significant overlap between the strategies and motivations for strategic buyers and financial buyers, making this categorization ambiguous at times. For more information on buyers, contact our advisory team here.