What does it mean when a company is considered a 'strategic buyer' in an acquisition?

A company classified as a 'strategic buyer' in an acquisition context refers to an entity that engages in transactions primarily to achieve goals that align with its long-term strategic objectives. In this scenario, the strategic buyer seeks to expand its market share by acquiring other companies, which can result in operational synergies. These synergies may include cost reductions through economies of scale, enhanced product offerings, improved distributions channels, and the potential to enter new markets or industries more effectively.

Strategic buyers often have specific operational or technological goals that they aim to achieve through acquisitions. This contrasts with financial buyers, such as private equity firms, that may prioritize financial returns and exit strategies over extending their market presence or operational control. The primary motivation for a strategic buyer is the long-term growth and sustainability of the business rather than short-term financial returns, which highlights their strategic focus in the M&A landscape.