Name 4+ reasons a strategic buyer can pay more for a target than a financial sponsor.

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IBPrep · Accepted Answer

(1) Synergies (cost + revenue), sponsors can't realize cost synergies the same way, and revenue synergies don't apply. (2) Lower cost of capital, strategics often have lower WACC than PE hurdle rates. (3) Longer investment horizon, no 5-year exit timeline. (4) Lower return thresholds, public-market shareholders accept lower IRRs than 20%+ PE hurdles. (5) Strategic value beyond financial returns (defensive consolidation, capabilities acquisition).

Name 4+ reasons a strategic buyer can pay more for a target than a financial sponsor.

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