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Financial buyer
Practical Law ANZ Glossary w-013-9740 (Approx. 2 pages)
Glossary
Financial buyer
A buyer that acquires a target company or business for investment, rather than strategic, reasons. A financial buyer is not directly engaged in an operating business. Instead, its business is to invest in existing operating companies and realise a return on the investments by building value in the companies, for example, by:
- Improving the target's underperforming business.
- Organically expanding the target's existing business.
- Completing a series of add-on acquisitions in the same industry to roll up the industry and create economies of scale.
Examples of financial buyers include private equity firms (also known as financial sponsors), venture capital firms, hedge funds, family offices, and high net worth individuals.
For information on the differences between a strategic buyer and a financial buyer, see Checklist, Strategic and financial buyers' comparison chart.