The Financial Buyer tends to be associated with a private equity firm. While many private equity firms may niche in an industry, their goal is typically not to grow a company long-term. They aim to make a substantial profit in a 3-5 year range, and then plan ahead to sell their past acquisition.
If I were to give it a sports analogy, they acquire “players,” but consider them individuals. They don’t focus on the overall “team.”
A Strategic Buyer, on the other hand, acquires companies to complement and build upon their own company. True to their name, they buy based on a strategic need that will accelerate the overall growth rate of a variety of entities.
They don’t think “players,” they think “team.”
Rather sharp focus, long-term plans
I enjoy working with Strategic Buyers, because when they come to me, they know specifically what they want. They’ve established an acquisition criteria, with very defined parameters. The attributes I see generally include:
● Capabilities: They want to complement or enhance their current strengths
● Talent: They need more qualified people, such as in sales or operations
● Customers: They may want to acquire the customer base of a competitor or a complementary company
● Geography: They may want to expand to a specific location or region
Strategic Buyers aren’t just investors. They are working in the industry, just like their peers. They are members of associations, like SGIA, GPI, FPA and TLMI.
They rub elbows with other printers and converters not just because they’re looking for deals, but because they’re trying to build and expand on their own knowledge base. They want their industry to succeed.
Perhaps the biggest difference between a Strategic Buyer and a Financial Buyer is the Strategic knows and interacts with the end buyer. They are literally boots-on-the-ground.
Commitment to culture
One of the elements I like most about a Strategic Buyer is their commitment to leadership and culture. The “team” versus “player” approach means they see an acquisition as holistic in nature. It’s about more than just a balance sheet; they’re attuned to the cultural balance that accompanies any M&A.
Tremendous growth is a number-one priority. Absolutely. But there is also emphasis on the growth of people, intertwined with the overall organization.
I’ve seen countless M&As fail because of poor transitions -- because workforces were not prepared for the seismic shifts that occur when companies merge. Private equity firms know this; they wouldn’t be in the game if they didn’t.
But a Strategic Buyer has much more skin in the game if their cultural merger doesn’t work. There’s a qualitative element to it as well. As an industry man, it’s why I really enjoy working with these entrepreneurs and strategists. If you’re looking to sell, you should plan to as well.
Rock LaManna, the author of L&NW's popular "The Bottom Line" column, empowers label company owners with 35 years of print industry experience. With the LaManna Alliance, you’ll make smart decisions about growth, selling, or succession plans. Let’s talk: Rock@RockLaManna.com