Why Three Buyers Will Offer You Three Different Prices for the Same Business

Last week I gave a talk and asked the room just one question: When a buyer offers to buy your business, do you know WHY they want it?

Almost nobody did. And that gap costs founders real money. Because three buyers can look at the exact same business and hand you three completely different offers.

Three Buyer Types

There are only three reasons anyone buys a business:

• Lifestyle. They want to own a job. Replace an income, run it themselves, get out of corporate hell.
• Strategic. They already own something and want what you have. Your customers, your team, your market.
• Financial. They want a return. Clean numbers in, bigger numbers out.

Same business. Three buyers. Three very different prices.

What They Want

The lifestyle buyer cares about one thing: Can they run it without you?

The strategic buyer pays the most, because buying you saves them years of building it themselves. It's a way to scale even faster by grabbing marketshare, your team, and everything else you've built.

The financial buyer will negotiate every half-point of the multiple, and feel nothing while they do it. We have yet to have private equity as a buyer of our listings for this exact reason.

The Mistake

So when you pitch all three the same way, you leave money on the table.

Most founders walk in talking about the wrong thing to the wrong buyer.

Key Takeaways

Know your buyer type before you pitch. Lifestyle buyers want to know they can run it solo. Strategic buyers pay top dollar because you're saving them years of work. Financial buyers are all about the numbers and will squeeze every point they can.

Understanding why someone wants your business changes everything about how you position it and what you can ask for.