Strategic: A Strategic buyer is a corporation or a larger organization providing similar services as a target asset. Strategic Buyers tend to move slowly towards LOI, but are much quicker to accomplish due diligence and purchase agreement than other buyer types. Strategic Companies care more about increasing market share than profitability. They will look to consolidate the general, marketing, and administrative aspects of your business in order to reduce overhead or fixed costs.
Financial: Focused on return of investment capital, the financial firm utilize an arbitrage model of buying, building, and generating a higher return on investment through a sale. Financial firms tend to be Private Equity firms (aka Financial Sponsors), however there are also search funds and family offices. A financial buyer will quickly put an offer together, but tend to be very slow when it comes to diligence and definitive agreements. These buyers are great for businesses generating over 2MM of EBITDA with sellers who would like to be part of the future growth of the company while still getting some cash for what they have built.
Independent: This is a term we created to define a large batch of buyers that don’t fit into the other categories. Independents are modestly-sized and act more like strategic buyers. They purchase entities as the primary business or vertically integrate the business into another healthcare platform. In some cases, these buyers are looking to transition from operations senior management into equity ownership. These are usually only buyers for smaller companies.