Who buys, and how they decide.
Almost every buyer is a committee with a spreadsheet and a reason. Strategic acquirers, private-equity platforms and the companies they own, growth investors, family offices, search funds and aggregators – what each of them is actually buying, the arithmetic that sets their ceiling, and why the same company is worth different amounts to each of them.
- A buyer’s name tells you little; its thesis, its approval path, its funding and its return logic tell you what it can pay.
- A financial buyer’s ceiling is arithmetic on its plan for your company; a strategic buyer’s price is a specific number that has to be found, not a category that can be assumed.
- An inbound approach is information about the buyer, not a valuation of you – and the buyer you choose is the environment your people and your earn-out will live in.
Seven kinds of buyer, and what each one is paying for.
These are underwriting patterns, not rules. A strategic can move quickly, a family office can use leverage, and a company owned by a fund can behave quite differently from its sponsor. The useful question is not the label. For any buyer it is the same six: what are they buying; who approves it; where does the money come from; what return or synergy logic constrains the price; what alternatives are they comparing you against; and what would ownership by them look like?
- The strategic acquirer.
An operating company buying product, customers, distribution, capability or time – and, in the best case, a position in its own market that it could not build fast enough. It pays for what your company is worth to it, which can be far above any market multiple, and it decides slowly, through a sponsor, a business case, a finance review and a committee or board. Its risk is integration; its habit is to underwrite cost savings it can control and to discount revenue synergies it cannot. In 2025, strategic buyers accounted for roughly 57% of global deal value.1
- The private-equity platform buyer.
A fund buying your company as a new platform: it will finance part of the price with debt, install or retain management, add smaller acquisitions to it, and sell it within a finite hold – and the price it can pay is the output of that plan. In a widely cited survey of fund practice, the median fund targeted a return of about 25% a year and 2.5 times its money, and fewer than one in five used a WACC-based discounted-cash-flow model at all.2 Realised holding periods at exit had stretched to about seven years by 2025.3
- The private-equity-owned company.
A portfolio company buying you as an “add-on”: in the United States, about three of every four buyout transactions were add-ons rather than new platforms as of the third quarter of 2025.4 It behaves like a strategic in what it values – your customers and product bolted onto its own – and like a fund in how it decides: fast, disciplined, on a return model. In our experience of the European mid-market it is often the highest credible bidder, and the one founders least expect.
- The growth or minority investor.
Buys a stake, not the company; offers partial liquidity and capital for growth; arrives with a preference stack, governance rights and a fund’s clock. A different transaction with a different set of documents, and often the right answer for a founder who is not ready to leave. Sell, sell part, raise, or wait →
- Family offices and holding companies.
Patient capital with fewer covenants, longer horizons and less appetite for a formal process. They can be excellent owners and slow bidders; the question to settle early is who decides, and how quickly.
- Search funds, aggregators and roll-ups.
The source of a large share of inbound approaches. Some are well capitalised and serious; many are thin on equity and lean on earn-outs, vendor notes and your own company’s cash flow to fund the price. The tell is in the structure they propose and in whether the person writing to you can commit capital or is collecting conversations.
- The listed acquirer paying in shares.
A strategic whose currency is its own stock. The headline is set at signing; what you receive is set on the day you are able to sell, after any lock-up. Treat the shares as an investment decision about the buyer, not as cash.
A private-equity bid is the output of a plan for your company – not an opinion about its past.
Illustrative, and deliberately simple. A company earning €5 million of EBITDA is bought for €50 million (ten times). The fund borrows €20 million against it and invests €30 million of equity. What the fund earns depends on three assumptions it makes about your company, which you will influence at most partly after closing.
| The fund’s plan | EBITDA growth | Exit multiple | Equity at exit | Multiple of money | Annual return |
|---|---|---|---|---|---|
| Base case | 10% a year for five years | 10× | ≈ €73M | ≈ 2.4× | ≈ 19% |
| Their upside | 15% a year | 10× | ≈ €93M | ≈ 3.1× | ≈ 25% |
| Multiple compression | 10% a year | 8× | ≈ €56M | ≈ 1.9× | ≈ 13% |
Assumes €12 million of debt repaid from cash flow over the period and no fees or add-on acquisitions. Against a target of 25% and 2.5 times, only the upside case clears. Funds typically underwrite to a five-year exit; realised holds, as noted above, have run longer – and at the same multiple of money, a longer hold is a lower annual return. At €50 million this fund’s base case fails its own hurdle; the price at which it clears – roughly €44–49 million with the same debt, depending on which target binds (2.5× in five years is a 20% annual return; 25% a year is 3.05×) – is the ceiling this section is about. That is why a fund’s bid moves with its conviction about your growth, with the debt its lenders will provide, and with what it believes it can sell at – and why, when the price is stretched, the fund reaches for structure: an earn-out that pays you only if its upside case comes true, or a management rollover that reduces its equity cheque and keeps you invested in its plan. The ceiling is real, and it is arithmetic. Knowing it tells you which of a fund’s terms are negotiable and which are load-bearing.
What a corporate is really buying, and what its committee will believe.
A strategic buyer’s price has two layers: what the company is worth on its own, and what it is worth combined – the synergies. The committee that approves the price has learned to trust one kind and doubt the other. In a 2004 McKinsey study of 160 mergers, almost 70% failed to achieve the revenue synergies they had promised, while about 60% delivered their cost synergies more or less in full;6 acquirers have typically targeted cost savings equal to 6–10% of the target’s revenue.7 So a buyer will pay confidently for costs it can remove and cautiously for growth it hopes to add – unless the seller has built the growth case in the buyer’s own terms, with the buyer’s customers, channels and price points, and made it hard to discount.
This is also why strategic prices are so much more dispersed than financial ones. In a study of 349 takeover auctions, strategic bidders valued targets at 16.7% above stand-alone value on average against 11.7% for financial bidders – but in roughly one auction in four the financial bidder valued the company higher, and the spread of strategic valuations was about twice as wide.8 An earlier study of 1,292 acquisitions found targets received premiums about 55% higher from listed corporate acquirers than from private-equity funds.9 Both are evidence about listed American targets; the mechanism is what travels: the value of your company to the right strategic buyer is a specific number that has to be found, not a category that can be assumed. Strategic Value Dispersion, stated precisely →
An approach is information about the buyer. It is not a valuation of you.
Inbound is now common. In a 2025 survey of 401 US middle-market chief executives, 54% reported contact from a private-equity firm in the previous twelve months.10 Much of it is a sourcing machine: junior staff or outsourced agencies writing to every company on a list, so that the fund’s partners see ten conversations a week and pay for one. Some of it is a competitor or partner testing whether you are for sale. A little of it is a sponsor inside a strategic who has already argued for you at their own table.
Three things tell them apart. Who signed: a principal or a business-development analyst. What they already know: whether the letter could have been sent to anyone in your sector or only to you. And what they ask first: a fund whose first three questions are ARR, net churn and margin, and whose fourth is not “what does the product do?”, is running a screen, not a thesis. None of these makes an approach worthless – it is real evidence that your company is visible – but the first number a buyer offers is the answer to a question they asked themselves, not to any question you have asked the market. The three honest outcomes of an offer →
You are negotiating with your future employer.
In a study of 448 acquisitions of small technology companies by large listed acquirers, 63% of target chief executives were still in place two years after the deal, and founder-chief-executives were markedly more likely to be retained than hired ones – in acquisitions made for the technology of a young company, about 80% against 42%.11 Employees are less patient: US census data on some 4,000 technology acquisitions found a third of acquired staff gone within a year, against 12% of ordinary hires.12
Two consequences. Your stay period, your role and your team’s retention are part of the price whether or not anyone calls them that, and they are negotiated best before exclusivity, alongside the headline. And the buyer you choose is the environment your people will work in and your earn-out will be measured in. A process that finds the highest bidder and ignores who they are has answered half the question – which is why buyers should be diligenced too. What happened to your last three acquisitions? Chapter 7 →
Before we contact a prioritised buyer, that buyer has a written thesis: what they would be buying, who inside them would sponsor it, what they have paid before and which alternative they are really weighing you against. A list of logos is not intelligence. And the call gets taken: across our careers we have sat on the buyer’s side of some $10 billion of acquisitions, and a call from us arrives with a case a committee can approve, not a teaser. Buyer decision intelligence, and why buyers take the call →
1 Bain & Company, Global M&A Report 2026 (January 2026): 2025 deal value of about $4.9 trillion, of which strategic M&A roughly $2.8 trillion (57%), financial investors roughly $1.5 trillion (31%) and venture roughly $0.6 trillion (12%). Value-weighted; Bain counts private-equity add-ons as strategic.
2 Gompers, Kaplan & Mukharlyamov, “What Do Private Equity Firms Say They Do?”, Journal of Financial Economics 121(3), 2016: survey of 79 private-equity investors managing over $750 billion – median target IRR 25%, median target multiple 2.5×, about 96% using a five-year forecast horizon, fewer than 20% using a WACC-based DCF. Self-reported targets, mostly large US funds.
3 Bain & Company, Global Private Equity Report 2026: holding period at exit about 7 years in 2025, up from 5–6 years in 2010–2021; McKinsey, Global Private Markets Report 2026: median hold 6.6 years.
4 PitchBook, Q3 2025 US PE Breakdown: add-ons 74.1% of US buyout transactions. United States only.
5 Software Equity Group, 2026 Annual SaaS Report: 2,698 SaaS M&A transactions in 2025; private-equity involved as buyer or as owner of the buyer in about 58%; public strategics 21.6%, private strategics 20.6%. Category labels are SEG’s; global, skewed to disclosed and US deals.
6 Christofferson, McNish & Sias, “Where mergers go wrong”, McKinsey Quarterly, 2004: 160 mergers. Dated and large-cap; McKinsey’s 2018 survey of 200 executives found an average 23% shortfall against revenue-synergy targets.
7 L.E.K. Consulting, Keys to Unlocking Merger Value: Cost Synergies (October 2024): median announced cost-synergy targets of 6–10% of target revenue, 1990–2023; announced targets, not realised savings.
8 Gorbenko & Malenko, “Strategic and Financial Bidders in Takeover Auctions”, Journal of Finance 69(6), 2014: 349 US cash takeover auctions, 2000–2008; financial bidders valued the target higher in 22.6% of auctions. Listed targets; structural estimates.
9 Bargeron, Schlingemann, Stulz & Zutter, “Why do private acquirers pay so little compared to public acquirers?”, Journal of Financial Economics 89(3), 2008: 1,292 US acquisitions of listed targets, 1990–2005; three-day target returns of 31.7% for public acquirers against 20.5% for private-equity acquirers. Announcement premiums, not multiples.
10 Capstone Partners, 2025 Middle Market Business Owners Survey (401 US private-company chief executives, fielded August–October 2025): 53.9% reported inbound contact from a private-equity firm in the prior twelve months. US, all sectors, sponsored by an investment bank.
11 Aghasi, Colombo & Rossi-Lamastra, “Post-Acquisition Retention of Target Founder-CEOs”, Journal of Management Studies 59(4), 2022: 448 acquisitions (2001–2005) of technology companies with up to 500 employees, in the US and EU, by listed acquirers; retention measured at two years.
12 J. Daniel Kim, “Predictable Exodus: Startup Acquisitions and Employee Departures” (MIT Sloan, 2019): US census employment records for about 4,000 technology acquisitions, 1990–2011; 66% of acquired workers remained one year after the deal against 88% of ordinary hires. Employees generally, not founders.
Which of them would pay the most for your company – and why?
That is the question a buyer universe answers, and it is a specific one. Thirty minutes with a partner: which categories of buyer apply to you, who inside them would sponsor it, and what would have to be true for them to pay above the market range.
Reading this with a live transaction in front of you? Ask a partner about buyers and how they decide → No engagement, and no need to name the company.