Private Equity vs. Strategic Buyer: Who Should You Sell To?

If you're considering selling your aviation business, one of the most critical decisions you'll face is who to sell it to. While several types of buyers may express interest, the two most common acquisition scenarios: Private Equity (PE) firms and Strategic Buyers. Both come with unique motivations, deal structures, and long-term implications, so understanding the differences is essential before entering negotiations. In this article, we shall explore who they are and their motives to help you define what is best suited for your business.

Who Are Private Equity Buyers?

Private equity firms are financial investors looking to acquire companies with the goal of generating returns within a defined investment horizon, typically 4 to 7 years. They do this by improving profitability, driving growth, and ultimately exiting the investment, often through a resale, IPO, or merger.

PE buyers often focus on:

• Profitable company with cash flow stability and growth potential

• Operational improvement and cost optimisation

• Leveraging debt to enhance returns (leveraged buyouts)

• Building platform companies and add-on acquisitions

They usually don’t aim to run the business themselves but bring in strong management teams or retain existing ones, providing capital, resources, and strategic oversight.

Who Are Strategic Buyers?

Strategic buyers are typically companies or individual investors in the same or adjacent industry, looking to acquire businesses that align with their long-term vision. The motive is not just financial gain, but also synergies, such as expanding product offerings, entering new markets, acquiring intellectual property, or improving supply chains.

Strategic buyers often:

• Seek integration opportunities (operations, teams, customers)

• Look for cross-selling and market expansion

• Are more likely to pay a premium for synergies

• May absorb your company into theirs or maintain it as a separate brand

Their decisions are based on how well your business fits within their strategic roadmap.

Key Differences between Them a Seller Should Know

1. Deal Structure and Valuation

Strategic buyers tend to offer higher upfront valuations, especially if your business fills a strategic gap or provides a competitive edge. They're often willing to pay a premium for synergy, seeing value beyond your company’s standalone metrics.

Private equity, by contrast, may offer a lower multiple upfront, but provide you with the opportunity to roll over equity and stay involved in the next phase of growth. If the business performs well post-sale, you could benefit significantly from a “second bite of the apple.”

2. Post-Sale Involvement

If you're looking for a full exit and want to step away from the business, strategic buyers are more likely to support that transition, especially if they plan to integrate your operations into their existing structure.

Private equity buyers typically want the founder or management team to stay on, at least for a transition period or until the next liquidity event. If you want to stay involved and grow the business with added capital and expertise, a PE firm might be a better fit.

3. Cultural Fit and Control

Strategic acquisitions can lead to cultural clashes if your team becomes absorbed into a larger corporation with a very different operating style. They may also change your brand identity, employee structure, or operational processes.

Private equity firms are usually more hands-off operationally; they provide oversight, resources, and governance, but let the management team run the business day to day.

4. Speed and Complexity of the Deal

Strategic buyers can move faster if motivated, but may require deeper integration planning. PE firms often run a more structured, process-driven due diligence, particularly around financials and growth potential. However, they also tend to be more sophisticated dealmakers and may have more experience navigating complex transactions.

Concluding points

Choosing between a private equity and a strategic buyer isn't just about the money; it's about the future of your business, your team, and your legacy. The right partner should share your vision, understand your value, and help you transition smoothly, whether you're stepping away or staying to build something bigger. It ultimately comes down to your goals as a seller. There’s not a universally “better” buyer, only the one that aligns with your vision, values, and long-term financial goals.

If you're considering selling your aviation business, working with an experienced M&A advisor can help you evaluate both options objectively, get in touch with Ms. Anna Tran, V.P., Brookfield Aviation Finance at anna@brookfieldav.com , and the Brookfield Aviation Finance team they will deep drive and curate strategies for you that that aligns with your personal and professional goals.