Capital Valuation Group

Who Might Be a Buyer For My Business?

Dear Cathy,
 
About 10 years ago I bought out two of my siblings/partners in an artisan cheese business in order to keep our family business within our family. I now have majority share with myself and one younger sibling left as owners in the business. I’d like to more clearly understand the options for who I/we may want to sell our business to even though that’s probably at least another 5 years down the road. Can you help me understand options for who might be a buyer for my business?

Thank you,
Elizabeth

Dear Elizabeth,
 
Thank you for your question! It is great that you are thinking ahead because every business has many values, depending on who the buyer is. Now is the time to start thinking about who might be the buyer for your business. As part of our early discussions we like to understand our client’s goals and motivations; for example, do you want to continue to keep the business within the family or are you interested in selling to an outside buyer, such as a competitor, in order to maximize your selling price?
 
Capital Valuation Group created the following chart to illustrate the different types of buyers and the relative values that each would pay for a business.

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As you can understand from looking at this chart, different types of buyers are motivated differently and perceive risk differently. So, while at first it may be a surprise to hear that every privately owned business has a number of different values, after reviewing this chart you can understand that the value is impacted based on who the buyer of the business might be – your younger sibling? A financial investor? An employee of your business? A competitor?

We work with business owners to identify the buyers in each of these groups/categories specific to their industry. Knowing how to market or raise awareness about their business before they are even ready to sell may increase the likelihood of selling to a buyer who is willing to pay a higher price.

I should mention that we do have quite a bit of experience working with artisan cheese companies, so if you are interested in talking further about your specific situation please let me know!

Kind Regards,
Cathy Durham

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