A Glossary of Acquisition Terms that you might encounter when Buying a Business cover image

A Glossary of Acquisition Terms that you might encounter when Buying a Business


Do you know the difference between an IM and SAV?

Or what exactly due diligence covers?

You might think you're supposed to know all this business buying and selling talk by now.

But hey, no one is born knowing how to buy or sell a business.

So, here's a bunch of those fancy terms and phrases that people throw around when they're talking about buying or selling businesses:


Acquihire refers to the acquisition of a company primarily for the skills and expertise of its staff, rather than for its products or services. In an acquihire, the focus is on bringing talented teams into the acquiring company, often to enhance its own workforce or to gain expertise in a specific area.


Example: Imagine you are looking at a listing for a small tech startup that has developed an innovative software application. The listing might not explicitly state "acquihire," but it may emphasise the team's skills and experience, especially in areas that are currently in high demand, such as artificial intelligence, machine learning, or data science.


In this scenario, a larger tech company might consider acquiring this startup not primarily for its software product, which might still be in development or not yet profitable, but rather to integrate the startup's skilled team into their own workforce. This could be particularly appealing if the acquiring company is looking to quickly bolster its capabilities in a specific technological area and recognizes that hiring such talent individually would be more time-consuming and potentially more expensive.


In an acquihire, the employees of the acquired company are usually offered roles in the acquiring company, and the terms of the deal may include arrangements for retaining these employees for a certain period. The acquiring company benefits from the immediate integration of a skilled team, while the employees of the acquired company gain security and resources from a larger organisation.


Confidentiality Agreement
A Confidentiality Agreement in the context of buying or selling a business in Australia is a legal contract that ensures all parties involved keep certain sensitive information private. This type of agreement is crucial in business transactions, where the disclosure of proprietary information can impact competitive positioning, operational integrity, or overall business valuation.


Example: Consider you're interested in purchasing a well-established restaurant in Sydney. Before the current owner shares detailed information such as financial performance, customer data, secret recipes, or supplier contracts, they require you to sign a Confidentiality Agreement. This agreement doesn't necessarily signal that the deal will go through, but it does protect the restaurant's sensitive data during negotiations.


As a potential buyer, signing this agreement means you agree not to disclose or misuse the information for any purpose other than evaluating the business opportunity. For the seller, it provides a safety net, ensuring that their trade secrets or customer lists won't be leaked or used against them if the sale doesn't materialise. Breaching this agreement can lead to legal repercussions, highlighting the importance of maintaining confidentiality throughout the process of buying or selling a business.

Deal structure
Deal Structure refers to the arrangement and terms under which a business sale takes place. This encompasses various elements including payment terms, asset allocation, tax considerations, and potential earn-outs or contingencies. The structure is tailored to balance the interests of both the buyer and the seller, often involving negotiations to reach a mutually beneficial agreement.



Imagine you are planning to buy a boutique hotel in Melbourne. The Deal Structure in this case could involve several components. Firstly, the payment terms: you might agree to pay a certain percentage of the purchase price upfront, with the rest financed over a set period. This could be beneficial if you need time to raise funds or want to use the hotel's future revenue to pay part of the price.


Next, consider asset allocation: the deal may specify what assets you're purchasing, such as the property, furniture, and the brand name. It might also detail liabilities, like existing staff contracts or supplier agreements, that you'd be taking over.


Tax considerations are also crucial. The structure of the deal can significantly impact tax liabilities for both parties. For example, structuring the sale as an asset purchase might offer tax benefits compared to a stock purchase.


Lastly, there might be an earn-out agreement, where the final sale price is partly contingent on the hotel's future performance. This can be attractive to you as a buyer if you believe you can enhance the hotel's profitability, and it offers the seller assurance of additional future payment based on the business's success under new ownership.


In summary, the Deal Structure is a critical aspect of business transactions, requiring careful consideration and negotiation to address the specific needs and risks of both the buyer and the seller.

Due Diligence
Due Diligence refers to the comprehensive appraisal undertaken by a prospective buyer to understand and evaluate a business's assets, liabilities, commercial potential, and risks before finalising the purchase. This process involves scrutinising financial records, legal documents, operational processes, and other critical aspects of the business to ensure there are no hidden issues or surprises.



Suppose you're interested in acquiring a small manufacturing company in Brisbane. As part of your Due Diligence, you would examine several facets of the business. This includes analysing financial statements to assess profitability, reviewing client contracts to understand revenue stability, and evaluating employee records to gauge workforce stability and potential liabilities.


Additionally, you would investigate the condition of manufacturing equipment, check for compliance with health and safety regulations, and review any existing legal disputes or pending litigations. Environmental assessments might also be pertinent, especially to understand any potential liabilities due to the manufacturing processes used by the company.


As a seller, you would prepare for this process by organising your financial records, legal documents, and operational details, ensuring they are accurate and up-to-date. This preparation can help expedite the Due Diligence process and build trust with potential buyers.


Due Diligence is a critical stage in the process of buying a business in Australia, as it allows the buyer to make an informed decision and negotiate the terms of purchase more effectively. It also helps in identifying areas that might require post-acquisition attention or investment.

Earn Out

An Earn Out is a contractual provision in the sale of a business where the final sale price includes a variable component based on the future performance of the business. This mechanism is used to bridge the gap between the seller's expected valuation and the buyer's offer, based on the business's actual performance post-sale. The Earn Out is contingent on the business achieving certain financial goals or milestones within a specified period.



Imagine you are negotiating to buy a boutique digital marketing agency in Sydney. The agency has shown potential, but its future revenue projections are uncertain. As a buyer, you propose an Earn Out arrangement to mitigate the risk. According to this arrangement, you agree to pay an initial sum upfront, followed by additional payments over the next few years, contingent on the agency meeting specific revenue or profit targets.


For the seller, this arrangement can be appealing as it offers the potential to receive a higher total sale price than the initial offer, provided the business performs well after the sale. It also demonstrates your confidence in the future success of the business.


On the other hand, as the buyer, the Earn Out allows you to tie a portion of the purchase price to the actual performance of the business, reducing the initial capital outlay and aligning the final price more closely with the business's true value under your management.


In summary, an Earn Out is a valuable tool in business transactions in Australia, offering a flexible approach to valuation and payment that can benefit both buyers and sellers in scenarios where future business performance is a key factor.


EBITDA, an acronym for Earnings Before Interest, Taxes, Depreciation, and Amortisation, is a financial metric used to evaluate a company's operating performance. It measures a business's profitability by focusing on earnings derived from day-to-day activities, disregarding the effects of non-operational factors like tax strategies and investment in assets.



Suppose you're considering the purchase of a boutique hotel chain in Queensland. During your financial assessment, you would encounter the term EBITDA in the hotel's financial statements. This figure represents the income the hotel chain generates from its regular operations, such as room bookings and event hosting, excluding expenses not directly tied to these core activities, like interest payments on loans, tax expenses, and the gradual reduction in value of the hotel's assets over time.


As a potential buyer, EBITDA gives you a clearer picture of the hotel chain's operational strength, allowing you to make a more informed decision about the value and potential of the business. For the seller, showcasing a strong EBITDA can be advantageous, as it highlights the profitability of the business's core operations, making it an attractive investment opportunity.


In summary, EBITDA is a crucial indicator for both buyers and sellers in Australia, providing a focused perspective on the financial health and operational efficiency of a business, free from the distortions of accounting and financial obligations.

+Equipment eg $500k +Equipment
When a business sale listing states "price plus equipment," it indicates that the cost of the business includes the sale price, plus an additional amount for the equipment used in the business. 

This means the buyer is expected to pay for the business itself at the listed price, and on top of that, pay an additional amount for the equipment necessary to operate the business.



Let's say you find a listing for a bakery with the sale listed as "$150,000 price plus equipment." In this scenario, the $150,000 is the price for the bakery business, including aspects like its brand, customer base, and location (leasehold rights, if applicable). The term "plus equipment" means that in addition to the $150,000, you will also need to pay extra for the bakery's equipment – such as ovens, mixers, display cases, and utensils.


The exact cost of the equipment is usually determined by either a pre-agreed amount or a valuation of the equipment at the time of sale. This setup allows the buyer to understand the total financial commitment required, which includes both the business purchase and the necessary operational tools. It's essential for buyers to clarify what specific equipment is included and its condition to assess the total value accurately.

EOI (Expression of Interest)
This term is used in the context of business sales to invite potential buyers to express their interest in purchasing the business. 

It is often the initial step in the selling process, particularly for businesses where the value is not straightforward or the seller expects high demand.



Imagine a unique boutique hotel is up for sale, and the listing says "EOI." This means that the seller is inviting potential buyers to submit an expression of interest. 

By doing so, you're not committing to purchase the business, but you're indicating your serious interest in it. The process usually involves submitting some basic information about yourself or your company, and possibly an indicative offer or a range of what you're willing to pay.


Following the EOI phase, the seller or their agent may invite selected interested parties to participate in further discussions, negotiations, or a formal bidding process. 

The EOI process helps the seller gauge the level of interest and the profiles of potential buyers, which can be particularly useful for high-value or unique businesses where the best buyer might not be the one offering the highest price, but rather the one with the right fit or vision for the business.


Fixtures and Fittings
When a business for sale is listed as "price plus fixtures and fittings," it means that the asking price for the business includes the cost of the business entity itself plus an additional cost for all the fixtures and fittings. Fixtures and fittings refer to items that are installed or fitted in the business premises, such as lighting, shelving, plumbing, and sometimes equipment that is permanently attached to the building.



Consider a listing for a restaurant that states the sale as "$250,000 price plus fixtures and fittings." Here, $250,000 is the price set for the restaurant business itself, including aspects like its brand, customer base, and leasehold rights. The term "plus fixtures and fittings" means you, as the buyer, will also need to pay extra for all the installed elements and permanent equipment within the restaurant. This could include the kitchen fixtures, bar counters, seating booths, lighting fixtures, and any built-in sound system.


The cost of these fixtures and fittings is typically determined by a valuation or an agreed-upon amount between the seller and the buyer. This setup is important for buyers to understand as it clarifies the total investment required to take over the business, ensuring operational continuity without additional major investments in the infrastructure of the business premises. It's crucial for buyers to get a detailed list of all fixtures and fittings included in the sale, along with their condition, to make an informed decision.

Freehold in the context of buying a business refers to the ownership of both the business and the property on which it operates. This means that the buyer is purchasing not just the business itself but also the land and buildings associated with it. The buyer has full control and ownership of the property without the need to pay ground rent or lease fees.



Suppose you are interested in buying a restaurant in Australia that is advertised as a "freehold" sale. This means you are not just buying the restaurant business, including its brand, recipes, and customer base, but also the building where the restaurant is located and the land on which it stands. As a freehold owner, you have the freedom to make modifications to the property, subject to local planning laws, and you don't have to worry about the terms and conditions of a lease or the risk of lease expiry.


This type of ownership is particularly attractive to business buyers who want complete autonomy and control over their property, as it eliminates concerns related to landlords, lease negotiations, and rent increases. However, freehold purchases usually require a higher initial investment than leasing a property.

GST (Goods and Services Tax)
The sale of a business is generally treated as a supply of a going concern and can be GST-free if certain conditions are met. To qualify as a GST-free sale of a going concern:


Both the seller and the buyer must be registered for GST.

The sale must include everything necessary for the continued operation of the business.

The seller and the buyer must agree in writing that the sale is of a going concern.

If these conditions are met, then GST is not added to the sale price of the business. This means the price negotiated between the buyer and the seller is the total price without the addition of GST.


It's important to note that specific situations can vary, and there may be exceptions or particular circumstances where GST might apply. Therefore, it's advisable for both parties involved in the sale of a business to consult with a tax professional or accountant to understand the specific tax implications and ensure compliance with Australian Taxation Office (ATO) regulations.


Horizontal vs. Vertical Acquisition
Horizontal and Vertical Acquisitions are two different strategies used when one company buys another.


  1. Horizontal Acquisition: This happens when a business buys another company that operates in the same industry and often at the same stage of production. The goal here is usually to increase market share, reduce competition, or achieve economies of scale.



Imagine you own a chain of coffee shops in Melbourne. If you buy out another chain of coffee shops in the same city, that's a Horizontal Acquisition. By doing this, you're reducing your competition and potentially increasing your customer base and market presence.


  1. Vertical Acquisition: This involves buying a business that operates in the same industry but at a different stage of the production process. The aim here is often to control more of the supply chain, reduce costs, or secure access to key resources or distribution channels.



Let's say you own a winery in the Hunter Valley. If you buy a company that supplies wine bottles or a distribution company that specialises in delivering wine, that's a Vertical Acquisition. This can give you more control over your supply chain, from production to distribution, potentially reducing costs and improving efficiency.


In summary, Horizontal and Vertical Acquisitions in Australia represent two strategic approaches in business expansions – Horizontal focusing on acquiring similar companies in the same industry, and Vertical aiming to control more stages of the industry's supply chain. The choice between these strategies depends on the acquiring company's objectives, resources, and the specific dynamics of its industry.

Information Memorandum
An Information Memorandum (IM) is a comprehensive document provided by the seller of a business, typically through their broker or advisor, to potential buyers. This document contains detailed information about the business that's for sale. It's designed to give you, as a potential buyer, a clear and in-depth understanding of the business, its operations, financials, market position, and potential.



Imagine you're interested in buying a café. After expressing your interest, you're given an Information Memorandum prepared by the seller. This IM would include details such as the café's history, its location, financial performance over the past few years (including profit and loss statements, balance sheets, and cash flow statements), details about its customer base, information on employees, any unique selling points, and details about the café's suppliers and lease agreements.


The IM might also cover the café's market position, competition, growth opportunities, and any risks or challenges it faces. Essentially, it's a dossier that aims to answer most of the questions you might have about the business, helping you make an informed decision about whether or not to proceed with a purchase.


As a buyer, you should review the Information Memorandum carefully. It's a key resource in your due diligence process, providing the detailed information you need to assess the viability and potential of the business. However, it's also important to verify the information provided in the IM independently, as it is prepared by the seller and may present the business in the most favourable light.

When buying a business, Leasehold refers to purchasing the business itself, but not the property it operates from. Instead, the property is leased from the owner (the landlord). This means the buyer gains control over the business operations, assets, and customer base, but they pay rent to occupy the space where the business is located.



Imagine you're interested in buying a café that is listed as a leasehold business. In this case, you would be buying the café business, including its equipment, branding, and perhaps inventory and staff contracts. However, the building where the café is located remains the property of the landlord. As the new business owner, you would take over the lease agreement and continue paying rent according to the lease terms.


This kind of arrangement is common in retail, hospitality, and other sectors where location is key. It allows you to own and run a business without the larger upfront capital requirement of purchasing property. However, it also means you have to abide by the terms of the lease and are subject to rent reviews and other conditions set by the landlord. Leasehold businesses can be attractive due to their lower initial investment compared to freehold purchases.


Mergers vs. Acquisitions (M&A)
Mergers and Acquisitions (M&A) are two fundamental types of corporate strategies used for combining companies or assets, typically to expand a company's reach or enhance its competitiveness.

1. Merger: This is when two companies, often of similar size, agree to go forward as a single new company instead of remaining separately owned and operated. This is a mutual decision and often seen as a strategy for growth, diversification, or increasing market share.


Imagine two Australian telecommunications companies of roughly equal size decide to merge. They combine their resources, customer bases, and operations to form a new entity. The goal might be to create a stronger competitive force in the market, expand their network coverage, or combine technological capabilities.


2. Acquisition: This occurs when one company takes over another and becomes the new owner. This can be a friendly takeover (agreed upon by both companies) or hostile (where the target company doesn't want to be purchased). Unlike mergers, acquisitions usually involve companies of different sizes.


Consider a large Australian retail corporation deciding to acquire a smaller, specialty online store. The larger company buys the majority of the smaller company's shares, effectively taking control. This could be a strategy to expand into new product lines or leverage the online store's unique brand and customer base.


Non-Compete Agreement
A Non-Compete Agreement is a legal contract where one party, usually the seller of a business, agrees not to start a new, competing business within a specific area and for a certain period after the sale. This is to ensure that the seller does not use their knowledge or contacts to take away customers from the business they just sold.



Suppose you're buying a boutique fitness centre in Brisbane. As part of the sale, you might ask the seller to sign a Non-Compete Agreement. This agreement could state that the seller will not open another fitness centre within a 20-kilometre radius of the one you're buying for the next five years.


This agreement is beneficial for you as a buyer because it protects your investment. It ensures that the seller, who likely has a good understanding of the business and its clientele, doesn't set up a competing business nearby, which could negatively impact your new venture.


For the seller, agreeing to a non-compete clause might be a necessary step to close the deal, although it limits their future business endeavours in that particular industry or area for the duration of the agreement.


In summary, Non-Compete Agreements in Australia are crucial in business sales to protect the buyer’s investment and to prevent the seller from starting a direct competition immediately after the sale.


Non-Disclosure Agreement (NDA)
A Non-Disclosure Agreement (NDA) is a legal contract where parties agree to keep certain information confidential. This is especially relevant in business transactions, where sensitive information is often shared between the buyer and seller. An NDA ensures that the confidential details do not become public or used for other purposes.


Imagine you’re interested in buying a software development company in Sydney. Before the owners share any proprietary code, client lists, or financial details, they ask you to sign an NDA. By doing this, you agree not to use or disclose the information for any purpose other than evaluating the potential acquisition.


Difference Between an NDA and Confidentiality Agreement:

While NDAs and Confidentiality Agreements are often used interchangeably in business contexts, there can be subtle differences:


  1. Non-Disclosure Agreement (NDA): Typically used in situations where specific information is shared between parties, with an emphasis on the non-disclosure aspect. It's often more focused on protecting information that's disclosed during negotiations.
  2. Confidentiality Agreement: Generally broader in scope, covering non-disclosure, non-use, and sometimes non-competition aspects. It's used to protect sensitive information in a wider range of scenarios, not limited to a specific negotiation or transaction.

In a business buying context in Australia, either term could be used, but the core purpose remains the same – to protect sensitive business information during and after the negotiations.


ONO (Or Nearest Offer)
This term is often used in the sale of a business to indicate that the seller is open to considering offers that are close to the listed price, but not necessarily exactly at that price. It suggests a degree of flexibility in the sale price and invites potential buyers to negotiate.



Let's say there's a café for sale listed at $150,000 ONO. This means that while the seller is asking for $150,000, they are open to considering offers that are close to this amount. If you are interested in buying this café, you could make an offer slightly lower than $150,000, say $145,000, knowing that the seller is open to negotiation and may accept an offer that is not exactly at the asking price but is reasonably close to it.


The use of ONO in a business sale indicates a willingness on the part of the seller to engage in negotiations and shows that there is some room for discussion regarding the final sale price.

PE Firm (Private Equity Firm)
PE (Private Equity) Firm is an investment management company that provides financial capital to businesses, typically through investments or buyouts. PE Firms invest in various kinds of businesses, from startups to established companies, with the goal of improving or growing the business and eventually selling their stake for a profit.



Suppose you're the owner of a mid-sized technology company in Melbourne that's showing potential for growth but needs capital to expand. A PE Firm might approach you to buy a significant stake in your company. Their investment could be used to fund new product development, expand into new markets, or streamline operations.


For you as a business owner, partnering with a PE Firm can provide not only capital but also expertise and industry connections. It might mean giving up some control, as PE Firms typically play an active role in business decisions, aiming to increase the value of their investment.


On the other hand, if you're looking to buy a business, you might encounter a PE Firm as the seller. They may have acquired the business previously, improved its operations or profitability, and are now looking to sell their stake to realise a return on their investment.


In summary, PE Firms in Australia play a significant role in the business landscape, providing funding and expertise to companies with growth potential and buying and selling businesses as part of their investment strategies.

Plant eg $500k +Plant
When a business for sale is listed with "price plus plant," it means that the asking price for the business includes the cost of the business entity itself, plus an additional amount for the plant and equipment. The term "plant" in this context typically refers to the physical assets or machinery necessary for the operation of the business, such as manufacturing equipment, tools, or vehicles.



Suppose you come across a listing for a manufacturing business with the sale advertised as "$300,000 price plus plant." This means that the $300,000 covers the cost of purchasing the business entity, including aspects such as the brand, customer base, and possibly the leasehold rights or real estate. The "plus plant" part indicates that in addition to the $300,000, you will also need to pay extra for the manufacturing equipment, machinery, and any other physical assets used in the business operations.


This additional cost for the plant is typically negotiated between the buyer and seller, and it may be based on the current market value or the depreciated value of the equipment. Including the plant in the sale can be advantageous for the buyer, as it allows for a seamless transition and immediate operational capability. However, it's crucial for the buyer to assess the condition and suitability of the plant to ensure it meets their operational needs and that they are paying a fair price for these assets.

POA (Price on Application)
"POA" stands for "Price on Application." 

This term is used in business listings and advertisements to indicate that the seller has chosen not to publicly disclose the asking price of the business. 

Instead, interested buyers are invited to contact the seller or the broker to enquire about the price.



Imagine you come across a listing for a café for sale with the price listed as "POA." This means that the seller is not publicly stating how much they are asking for the café. To find out the price, you would need to directly contact the seller or the real estate agent handling the sale. They might provide the price upon request, or they might first ask for some information from you, such as your budget or interest level, before disclosing the price.


The use of "POA" can be a strategy to attract serious buyers, to create a sense of exclusivity, or to allow for price flexibility in negotiations. It can also be used in situations where the value of the business is not easily determined and may require discussions or negotiations to arrive at a fair price.

SAV (Stock At Value)
When buying a business, the term "+ SAV" stands for "plus Stock at Value." 

You might see this in business sale listings and it indicates that the purchase price of the business is in addition to the cost of the inventory or stock the business currently holds, valued at its purchase or manufacturing cost.



Suppose you are buying a retail clothing store. The business might be listed for sale at $200,000 + SAV. This means you pay $200,000 for the business itself, and in addition, you pay for the stock the business currently has. If the stock (clothing, accessories, etc.) is valued at $50,000 at its cost price, your total payment would be $200,000 (for the business) + $50,000 (for the stock), totaling $250,000.


This term is significant because the value of the stock can vary significantly based on the type and size of the business, and it represents an additional cost that the buyer needs to consider when purchasing the business.

Multiple refers to a financial metric used to estimate the value of a business. It is a ratio that compares the business's selling price to a specific financial metric, typically earnings or revenue. This ratio helps in determining how much a buyer is willing to pay for a business based on its financial performance.



Imagine you are interested in purchasing a café in Adelaide. The café's annual earnings are reported to be $200,000. If businesses in the café industry are typically sold for a multiple of 3 times their annual earnings, then the estimated value of the café would be around $600,000 (3 times $200,000).


As a buyer, understanding and using multiples helps you to gauge whether a business is reasonably priced in comparison to its earnings or revenue. It's a tool for comparing different businesses and making an informed decision about the investment value.


For a seller, knowing the typical multiple for their industry can guide them in setting a competitive and realistic asking price for their business.


In summary, "Multiple" in the Australian business buying context is a key valuation tool, providing a benchmark for both buyers and sellers to assess and negotiate the financial worth of a business.

SDE (Seller’s Discretionary Earnings)
Seller's Discretionary Earnings (SDE) is a financial metric used to determine the true earning potential of a small to medium-sized business. SDE adjusts the business's net profit by adding back expenses that are unique to the current owner, such as the owner’s salary, benefits, and any personal expenses passed through the business. This provides a clearer picture of the business's potential profitability under new ownership.



Let's say you're interested in buying a small boutique in Melbourne. The financial statements show a net profit of $120,000. However, the current owner also takes a salary of $80,000, which is included in the business expenses. Additionally, there are some personal expenses like a car lease and travel, totalling $20,000 per year, that are also run through the business.


To calculate the SDE, you would start with the net profit of $120,000, then add back the owner's salary and personal expenses. This gives an SDE of $220,000 ($120,000 + $80,000 + $20,000).


For you as a buyer, SDE is a useful tool to understand the actual financial benefit you could derive from the business, as it shows the earnings before the impact of the current owner's personal financial choices.


For the seller, presenting the SDE figure can make the business more attractive to potential buyers by highlighting its earning potential after adjusting for expenses that are specific to the current owner.


In summary, SDE is a crucial concept in the valuation of small and medium-sized businesses in Australia, offering a more accurate reflection of a business's earning potential by accounting for the current owner's discretionary expenses.

Stock Included
When a business for sale is listed with "stock included," it means that the inventory of the business is included in the sale price. This term is often used in retail, wholesale, or manufacturing business sales where the inventory, or stock, is a significant part of the business operations.



Imagine you find a listing for a retail clothing store that states, "Sale Price: $200,000, stock included." This indicates that for the price of $200,000, you are purchasing not only the business itself – which may include the store's brand, customer base, and leasehold rights – but also the store's current inventory. This inventory could consist of all the clothing items, accessories, and any other goods available for sale in the store.


The inclusion of stock in the sale price can be a substantial benefit for the buyer, as it means there is no need to make an additional investment to acquire inventory immediately after taking over the business. The store can continue to operate and generate revenue without interruption. However, it's important for the buyer to assess the value and quality of the stock included to ensure it aligns with the market demand and their business strategy.

Strategic Buyer
A Strategic Buyer is an individual or company that acquires another business for reasons beyond just financial returns. These buyers are often in the same or a related industry and are looking to acquire a business to achieve strategic objectives such as gaining market share, accessing new markets, enhancing product lines, or achieving synergies.



Imagine you own a software company in Sydney that specialises in educational technology. A large publishing company that produces educational materials but lacks a strong digital platform might be interested in acquiring your business. This publishing company would be considered a Strategic Buyer because, through the acquisition, it can expand its digital offerings, leveraging your technology to enhance its existing product lines and enter new markets.


For you, as the seller, selling to a Strategic Buyer can be advantageous because they may be willing to pay a premium for your business due to the strategic benefits it offers them.


For the buyer, this acquisition is not just a financial investment but a strategic move to strengthen their market position, diversify their product offerings, or gain a competitive edge.


In summary, a Strategic Buyer in the Australian busin

ess context is one who looks at the broader, strategic implications of acquiring a business, focusing on long-term growth, market positioning, and synergy rather than just immediate financial gains.


WIWO (Walk In, Walk Out)
This term is used to describe a situation where the sale of a business includes everything needed to continue operating the business as it currently stands. 


It typically means that the buyer can start running the business immediately without needing to make additional purchases or major changes.



Suppose you are interested in purchasing a small bakery that is advertised as a "WIWO" sale. This means that the purchase price includes not just the physical location and the brand, but also all the equipment, inventory, and often the existing staff and operational systems. So, when you buy the bakery, you get the ovens, mixers, display cases, recipes, current stock of ingredients, and potentially the staff who are already trained and working there.


The advantage of a WIWO sale is that it offers a turnkey solution for the buyer, allowing them to step in and run the business without significant downtime or additional investment in setting it up. This type of sale is particularly attractive to buyers who want a seamless transition and immediate operational capability.