A key concept in determining what a buyer will pay for a business is often determined by the type of buyer. There are three main types of buyers.
A financial buyer is primarily focused on the numbers. The financial buyer may not have any experience in this type of business but because of the profitability and financial results of the business they are interested. Most buyers have some of the same questions and requirements of a financial buyer but, may have overriding other considerations. A significant part of the different valuation methods are based on this type of buyer.
Life style buyers frequently have a vision of a new life where they are in control. Sometimes this is someone that has always been in a larger business situation and they want the responsibilities both good and bad for the success of a business. Sometimes the life style buyer wants a particular type of business such as an antique car restoration business, a fishing shop, a woodworking shop, a software programing or many other situations. Lifestyle buyers will be interested in the financial considerations of the business.