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Fundamentals

Strategic Buyer

A strategic buyer is a company that buys another company to gain customers, products, locations or other benefits that fit its own business.

A strategic buyer is usually an operating company, often a competitor, a supplier or a customer. It buys because your business helps its own. It may want your customers, your people, your technology or your territory.

For example, a regional services firm buys a smaller rival in a nearby state. It plans to merge back-office work and cut duplicate costs. These savings let it pay more than a purely financial buyer.

Strategic buyers matter because they can pay for fit. The trade-offs are that your team may be cut, your brand may disappear, and you may not stay involved. Some owners also worry about sharing data with a competitor.

Compare them with a financial buyer, such as a private equity firm, which often keeps your team and brand and backs growth. See the pros and cons in private equity vs strategic buyer. Related: private equity.

Read nextPrivate equity vs strategic buyer: which one should buy your business?

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