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For years, business brokerage has classified buyers
into two broad groups: financial buyers-typically
individuals or private investors, and strategic buyers-
larger companies or private equity firms operating
at the mid-market level and above. However, this
distinction is becoming increasingly blurred.
Today, strategic buyers are showing greater interest
in Main Street and lower middle market businesses.
These buyers include local competitors, suppliers,
and business owners seeking geographic expansion,
skilled labor acquisition, or complementary services.
Their growing presence is reshaping how deals are
sourced, marketed, and negotiated.
Traditionally, brokers have tailored their approach
to financial buyers, often individual entrepreneurs
utilizing SBA financing. However, failing to adapt
to the rise of strategic buyers could mean missing
opportunities to bring stronger offers to sellers.
Understanding these buyers, who they are, what
they prioritize, and how to engage with them
effectively is now crucial in today’s market.
WHY STRATEGIC BUYERS
ARE MOVING DOWN MARKET
Strategic buyers have always been active in mid-
market acquisitions, but several factors are drawing
them toward smaller deals:
• Labor shortages: Companies are acquiring
businesses not just for their customers, but for
their skilled teams.
• Slowing organic growth: Mature companies
are finding that acquisitions offer a faster, more
predictable path to scale.
• Baby boomer retirements: A wave of
retirements is creating a surplus of sub-$5M
businesses, which previously wouldn’t have
attracted private equity interest.
• Capital efficiency: In an environment of
higher interest rates and tighter credit, smaller
acquisitions can deliver strong ROI without
requiring excessive leverage.
From HVAC firms to IT service providers to
commercial cleaning companies, well-established
operators are seeking acquisitions that provide route
density, new contracts, or operational synergies.
These buyers often close deals more quickly and pay
premium prices for businesses that align with their
strategic goals.
WHAT STRATEGIC BUYERS VALUE MOST
Unlike traditional financial buyers, strategic
buyers focus less on Seller’s Discretionary Earnings
(SDE) and more on how a business enhances their
existing operation. Brokers should reframe their
pitch to highlight integration potential rather than
standalone profitability.
Here are key triggers that attract strategic buyers:
• Geographic proximity to their existing operations
• Access to skilled labor, specialized licenses, or
certifications