Strategic buyer
An acquirer, usually in the same or a related business, that expects synergies from combining with the target and so may justify a higher price than a financial buyer.
Where you will meet it
Strategic buyer appears in 3 learning outcomes on the CFA syllabus. A few of them:
- Set out why private businesses are valued and what financial analysts should concentrate on
“The trap is using a strategic buyer's investment value for a tax filing that calls for fair market value.”
- Compare the ways a private investor can realise a holding and how each choice affects the value it achieves
“A trade sale to a strategic buyer gives a full cash exit, often at a premium that reflects synergies.”
- Explain the difficulties of estimating cash flow for private firms and the adjustments needed to arrive at normalised earnings
“A strategic buyer may add synergies that a financial buyer would not.”
See also
Practise it
Practise strategic buyer until it is automatic: questions that explain every wrong option.
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