When you’re evaluating an exit, the type of buyer on the other side of the table can dramatically shape both the structure of the deal and your ultimate payout.
Here are the key differences to watch for in Private Equity (PE) vs Strategic Buyer negotiations.


1. Valuation & Multiples
PE Buyers: Generally price based on financial performance, often tied closely to EBITDA multiples. They may structure part of the price in rollover equity to keep you aligned with the next growth phase.
Strategic Buyers: Will sometimes stretch valuation if your business fills a strategic gap, provides cross-sell synergies, or eliminates a competitor.

2. Payment Structure
PE: More likely to use leveraged structures (cash + debt + rollover). Expect a portion of your payout tied to reinvestment or seller notes.
Strategics: Tend to prefer all-cash or cash + stock deals. Integration synergies can justify quicker liquidity for sellers.

3. Earn-Outs & Performance Clauses
PE: Less common, but when used, earn-outs are tied to hitting financial KPIs (revenue, EBITDA).
Strategics: More likely to include earn-outs linked to revenue integration, customer retention, or growth targets within their ecosystem.

4. Role of Founders Post-Deal
PE: Typically want sellers to stay on, often 2–4 years, to ensure continuity. Management continuity is a big part of their underwriting.
Strategics: May want the founder to exit faster, since their own team can absorb operations. Sometimes offer short transition roles only.

5. Governance & Autonomy
PE: You’ll still run the business day-to-day but will report to the PE board. Decisions on major spend, hiring, or M&A will need approval.
Strategics: Full integration is likely. Your brand, systems, and team may be merged into the parent company.

6. Strategic Fit vs. Financial Engineering
PE: Focused on financial engineering and scaling — more disciplined, less emotional.
Strategics: Motivated by strategic synergies — sometimes willing to pay more, but integration risk is higher.

Takeaway for Sellers
Understanding buyer type upfront helps set expectations for valuation, payout timing, and your role post-closing. PE brings capital discipline and longer earn-in periods; Strategics bring strategic upside and quicker liquidity.
As you evaluate options, tailor your positioning to the buyer type — and don’t forget that term sheet
differences are often as important as headline price.