Who Are Your Potential Buyers
While each potential acquirer of your business is unique, they fall into two broad, but distinct categories: strategic and financial.
Strategic acquirers may be interested in your business for different reasons. Acquirers can drive value for their shareholders by acquiring capabilities that fill strategic gaps or by leveraging their existing capabilities to rapidly grow your business. Targeted messaging is required in each case.
Financial acquirers invest in strong stand-alone businesses where they see the potential for equity returns through a combination of applying significant debt to the business and enhancing the financial performance of the business. Their target returns, and hence acquisition valuations they pay, vary significantly by industry, geography and size of transaction. Common characteristics include:
- Typically high financial leverage
- Partial to full liquidity
- Typically control investments, minority investments have significant negative controls
- Most exit in 3-7 years
- Management retention is important, with significant performance incentives
For more information on who your potential buyers are, see the Who Are Your Potential Buyers?, a part of our Business Sale White Paper Series.
Surfacing the Outlier
Valitas knows the private equity funds and has access to the strategic acquirers that are interested in Canadian businesses. We maintain dialogue with over 400 private equity funds around the world. We are in regular contact with dozens of the most active industry consolidators in Canada, both domestic and global. Foreign acquirers seeking opportunities in Canada often cite the lack of reliable private market investment banking firms on which they can rely to identify quality mid-sized Canadian businesses. Valitas was formed to address this need.
With the multitude and diversity of potential acquirers, effective intermediation is required to surface the Outlier in this vast and complex group. Our experienced team members bring their previous private equity experience and market insight to the acquirer identification process and engages with them effectively. A missed Outlier can have significant ramifications for the ultimate transaction and the cost of failure can be high.