WHY BOTHER DOING IT THE HARD WAY?

In the dynamic world of business, whether you plan to part ways with your company soon or a decade later, the path to a successful sale involves two primary options: financial or strategic buyers. For leaders charting the course of their enterprises, understanding the distinctions between these options is crucial. The financial buyer is driven by the allure of your future profit stream, valuing businesses more when they promise increased profitability. To enhance your company's appeal to a financial buyer, focus on minimizing risks, establishing recurring revenue, diversifying your customer base, and fostering a strong leadership team.

On the other hand, the strategic buyer is less concerned about your future profits and more interested in the intrinsic value your business brings to their operations. Typically larger corporations, strategic buyers assess how owning your business can boost their own product or service sales. While they might pay more for your business compared to a financial buyer, it's important to recognize that strategic acquisitions are infrequent and influenced by various external factors. Leaders are advised to prepare for all eventualities, akin to nurturing a backup plan for a promising young athlete dreaming of turning pro. Thus, making your business attractive to both financial and strategic buyers ensures a well-rounded approach, increasing the likelihood of a successful exit.

So, why bother doing it the hard way? While the allure of a strategic buyer and a spectacular exit is tempting, the reality is that strategic acquisitions are rare. Industries usually have only a handful of strategic acquirers, and various external factors can impact their appetite to buy your business. Instead of banking solely on the rarity of a strategic buyer, positioning your company as an attractive option for both financial and strategic buyers is a prudent move. It's akin to having a comprehensive game plan – ensuring your business is not only a strategic asset but also a reliable cash machine, making your journey toward a successful exit a well-thought-out and rewarding endeavor.

Read the full article here: https://executiveleader.com/why-bother-doing-it-the-hard-way/

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