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WHO Pays the highest Purchase PRICE – Strategic or Financial Buyer?

2 Jun

By Huxley Nixon

Conventional wisdom has always been the Strategic buyer could pay more because of the potential to “rationalize” the less efficient or duplicate functions of the target company.   Frequently this meant firing most of the employees and selling or closing most of the target’s facilities.  A strategic buyer usually desires 80% to 100% of the equity and it is definitely not interested in less than a control equity position unless it is to acquire access to intellectual property or expansion into additional markets.  It virtually never is interested in the personal wealth creation of the Seller other than appreciation of any stock of the acquirer they may have taken as part of the purchase price.

On the-other-hand, Financial buyers such as private equity groups (“PEG”) usually are seeking strong “platform” companies to buy and grow and exit in three to five years.  They desire and need….Read More…

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