Strategic Buyer

Last updated: March 22, 2024

What Does Strategic Buyer Mean?

A strategic buyer is a type of acquirer who is in the same industry/business as the target company. Unlike a financial buyer, a strategic buyer looks for businesses that can be quickly integrated with its main operations. A strategic buyer typically will pay a valuation premium for a business because it attributes value to the synergies that can be generated by adding a complementary business to its existing operations. The value and probability that each strategic buyer assigns to the synergies can vary greatly.


Divestopedia Explains Strategic Buyer

A strategic buyer is better suited for a seller who wishes to exit quickly and maximize the dollar value on the sale. It is not suited for a seller who wishes to remain in the business, or wants to retain some autonomy. A strategic buyer has sufficient resources to absorb the seller, and will usually move quickly on realizing some of the synergies it has modeled. This usually entails the elimination of redundant overhead and assets, which may be difficult for a seller to adapt to.



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