There are 4 types of buyers:

• Operating companies that you fit with: Fit is either what is called a roll-up where smaller companies are being merged into a larger one, or you provide a greater array of similar products to their current customers or entry into a new channel of distribution for them. Recently, we worked on a company that had an excellent product line but was too small to get distributor or retail attention. They were acquired by a company that had the clout to take them into the distributor market and also the retail market. This was the true definition of synergy.
• Private Equity investors looking to help make you grow and turn their money at least 15% in 5 to 7 years.
• Private Equity that is building a larger company in the product/customer area, called a platform company: When they build the adequate size, they can sell it at a much higher multiple to a public company or take it public.
• A company or investment group that buys and holds good operating companies: This will be in a category that they understand and feel comfortable for the long run.

El Cheapo buyer tries to get you to sell and even finance a large portion because they are real good and will work with you. This type of buyer does not like us.

It is important to understand each type of buyer and therefore how they operate and your fit to maximize the price. The type of buyer and their operating culture and reputation will determine how they treat you and your people—you will have to stay for a number of years under an employment contract. There are exceptions, but this is fairly standard. The right decision is important for all.