Private Equity vs. Strategic Buyer vs. Individual: What Type of Buyer Is Right for Your Business?
- Mark Hartmann
- Apr 30
- 7 min read
If you’re a business owner thinking about selling your company—especially if you’re nearing retirement—one of the biggest decisions you'll face is who should buy your business.
You’ve probably heard terms like private equity, strategic buyer, and individual buyer, but what do they mean? And how do they affect the outcome of your exit?
As an M&A advisor—and as someone who’s sold my own business—I’ve worked with all three types of buyers. Each brings a different approach, motivation, and impact on your business, employees, and legacy.
In this post, I’ll explain the differences between private equity firms, strategic buyers, and individual buyers and help you determine which one might be the best fit for your business and goals.
Why the Type of Buyer Matters
Before diving in, let’s address the obvious: you want the best price for your business. That’s entirely fair.
But as I often tell my clients, the right buyer doesn’t always offer the biggest headline number. The deal's structure, the cultural fit, and what happens after the sale all matter—especially if you care about your people and legacy.
Understanding the types of buyers in the M&A world helps you:
• Prepare your business to appeal to the right audience
• Set realistic expectations for the sale process
• Choose a deal structure that aligns with your retirement goals
• Protect the legacy you’ve built
Now, let's break it down.
1. Selling to a Private Equity Firm
What is a private equity (PE) firm?
A private equity firm is an investment group that acquires businesses—usually using a mix of investor capital and debt—to grow the company and sell it again at a profit in 3–7 years.
PE firms often focus on companies with revenue of $5 million to $25 million (right in the sweet spot for many of my clients). They're looking for strong cash flow, growth potential, and a management team that can execute.
Why Sell to Private Equity?
• Liquidity with a Second Bite at the Apple
Many PE deals involve a partial sale where you roll over some equity into the new entity. This gives you a second chance to profit when the firm sells again down the road—sometimes worth more than the initial sale.
• Growth Capital & Expertise
PE firms often bring strategic resources, operational playbooks, and funding to accelerate growth. This can be a great path if you care about the business continuing to scale.
• Option to Stay Involved (or Not)
Some owners stay on as CEO or board advisor for a few years, while others exit fully. The terms can be customized to your desired level of involvement.
Downsides of Selling to Private Equity
• Cultural Shift
PE firms are financially driven. If your business has a close-knit, people-first culture, you'll want to ensure the firm respects that—or it can lead to friction.
• Not Always a Clean Exit
PE might not be the best fit if you want to leave entirely. They often wish you (or your leadership team) to stick around to help transition and grow.
• They Do Their Homework
PE buyers conduct deep due diligence. You'll need clean financials, systems, and processes—or you may not make it past the LOI (letter of intent).
2. Selling to a Strategic Buyer
What is a strategic buyer?
A strategic buyer is usually a company in your industry—or a related one—that wants to acquire your business to expand its own. They might want access to your customers, technology, geographic footprint, or talent.
Strategic buyers can be large corporations, regional competitors, or businesses looking to integrate their supply chain vertically.
Why Sell to a Strategic Buyer?
• Potential for a Higher Price
Because strategic buyers may see synergies (cost savings or revenue opportunities) by acquiring you, they may be willing to pay a premium. For example, if your company helps them grow faster than building in-house, they’ll value you more.
• Faster, Cleaner Exits
Strategic buyers often want full ownership and may have the capital to do all-cash deals, which can facilitate smoother closings.
• Better Fit for Legacy-Oriented Owners
If you’re concerned about your company’s brand, employees, or continuity, some strategic buyers will be more mission-aligned than financial buyers.
Downsides of Selling to a Strategic Buyer
• Employees May Be at Risk
If there’s overlap between your team and theirs, there may be layoffs or restructuring after the sale.
• You Lose Control Quickly
Strategic buyers usually want complete control right away. If you hope to stay, your role may change or disappear quickly.
• More Emotional for Owners
Selling to a competitor or industry player can bring up mixed feelings. Make sure the buyer respects what you’ve built.
3. Selling to an Individual Buyer
What is an individual buyer?
This is a person—usually a first-time buyer or small-scale entrepreneur—who wants to buy a business and run it themselves. Sometimes, they're backed by SBA loans, personal savings, or small investor groups.
They're often drawn to "main street" or lower middle market businesses with revenue between $1 million and $10 million.
Why Sell to an Individual Buyer?
• Good for Lifestyle Businesses
Individuals can be ideal matches if your business is stable, profitable, and a good fit for an owner-operator.
• Smoother Cultural Fit
Individual buyers are often hands-on, people-focused, and interested in preserving the business's operations.
• Can Be a Legacy Match
Many buyers want to build a future, not flip the business. This could be a great option if you want someone who will care about your customers and employees.
Downsides of Selling to an Individual Buyer
• Limited Financial Resources
They often rely on bank financing, seller financing, or SBA loans, which means more deal complexity and longer closing timelines.
• Heavier Seller Involvement Post-Sale
Individual buyers may want you to stay involved to train them or transition key relationships.
• More Risk of the Deal Falling Apart
Individual buyers are sometimes less experienced and may get cold feet or hit financing issues late.
How to Choose the Right Buyer Type for Your Business
Every business—and every owner—is different. The right type of buyer depends on what you care about most.
Here are a few guiding questions I walk through with my clients:
• Are you looking for a clean break or want to stay involved?
• Clean break? Strategic buyer or individual buyer (with sound systems).
• Want to stay involved? Private equity may offer a better path.
• Is your company highly scalable and growing?
• Private equity and strategic buyers will love that.
• Individual buyers may get overwhelmed if it’s too complex.
• Is preserving your team and culture a top priority?
• Individual buyers or mission-aligned strategic buyers are often better fits.
• With PE, culture preservation depends on the specific firm.
• Do you want maximum payout now—or are you open to longer-term value?
• Strategic buyers might offer a premium upfront.
• PE deals might include equity rollovers for future upside.
• Is your business “owner-dependent”?
• If you're the business, attracting PE or strategic buyers is harder.
• Individual buyers may be more open to buying a company centered around you—if you're willing to help with the transition.
My Advice: Start with Your Goals
I always tell clients to start with their goals, not just their company's valuation.
Do you want to walk away and retire?
Maximize your payout?
Ensure your people are taken care of?
Get a second payday down the road?
Once we're clear on those things, we can tailor the sale strategy accordingly and identify which type of buyer is most likely to align with your goals.
Final Thoughts: It’s Your Business—Exit on Your Terms
Selling a business is more than just a transaction. It’s a turning point.
The type of buyer you sell to will shape not only your financial future but also the future of your business. That's why it's critical to understand your options—and to work with someone who can help you find the right match.
At HartmannRhodes, I specialize in helping business owners like you—typically between $1 million and $25 million in value—navigate the exit process with clarity, confidence, and control. I've walked this path myself and brought that perspective to every engagement.
If you're considering selling or just exploring your options, I'd be happy to have a confidential conversation.
Let’s talk about your goals and how to find the right buyer for your business.
Schedule a call with me today.
Blog: Private Equity vs. Strategic Buyer vs. Individual: What Type of Buyer Is Right for Your Business?
Mark Hartmann is a former business owner turned M&A advisor who knows firsthand what it takes to build, grow, and sell a successful company. A three-time Inc. 5000 CEO, Mark did just that before navigating its eight-figure sale—giving him a rare perspective that sets him apart from most brokers. Today, he helps owners of companies valued between $1M and $25M plan and execute smooth, profitable exits.
Mark understands that selling a business isn’t just a financial decision—it’s personal. That’s why he works closely with owners to protect their legacy, maximize value, and make the transition on their terms. He holds an MBA from Eastern University, a Master’s Degree in Organizational Change Management from St. Elizabeth University, and a Graduate Certificate in Executive Coaching from Columbia University. Some of his professional credentials include Certified Mergers & Acquisitions Professional (CM&AP), Certified Business Intermediary (CBI), Certified Exit Planning Advisor (CEPA), and Certified Value Builder (CVB).
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