The Strategic vs. The Financial Buyer

The Strategic vs. The Financial Buyer

Tom Franceski and his two partners built DocStar up to 45 employees when they decided to shop the business to some private equity (PE) investors. The PE guys offered four to six times Earnings Before Interest Taxes Depreciation and Amortization (EBITDA), which Franceski deemed low for a fast-growing software company.

In fact, he and his partners wanted at least two times revenue for the business, which they knew they could get when Epicor, a strategic buyer, came knocking.

In this episode, you’ll learn:

  • Why strategic buyers pay more than financial ones
  • The definition of a frictionless acquisition
  • How to use a cocktail of seller financing and mezzanine debt to buy a company with little of your own money on the line
  • The difference between in- and outbound marketing
  • How acquirers secretly evaluate your business without you even knowing they’re sizing you up

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