Financial Buyer

AAA

DEFINITION of 'Financial Buyer'

A type of buyer in an acquisition that is primarily interested in a company's return on equity, investment, burden on management and cash flow. To determine this information, a financial buyer will carefully look over a company's financial statements and assets.

A financial buyer is typically a long-term investor looking for a solid, well-managed company. Financial buyers rarely make any immediate changes, except in turnaround situations where companies are not currently profitable.

INVESTOPEDIA EXPLAINS 'Financial Buyer'

Many everyday retail investors could be considered financial buyers. An investor taking either a value or growth approach to investing over the long term is following many of the same strategies that large financial buyers do.

Another example of a financial buyer is a former executive looking to purchase a job by finding a company to manage or turn around; alternatively, he or she could just be holding companies looking for a good return on investment and plan to keep current management in place.

RELATED TERMS
  1. Return On Investment - ROI

    A performance measure used to evaluate the efficiency of an investment ...
  2. Growth At A Reasonable Price - ...

    An equity investment strategy that seeks to combine tenets of ...
  3. Value Investing

    The strategy of selecting stocks that trade for less than their ...
  4. Value Stock

    A stock that tends to trade at a lower price relative to it's ...
  5. Growth Stock

    Shares in a company whose earnings are expected to grow at an ...
  6. Turnaround

    The financial recovery of a company that has been performing ...
Related Articles
  1. Economics Basics
    Economics

    Economics Basics

  2. Measuring Company Efficiency
    Fundamental Analysis

    Measuring Company Efficiency

  3. Is Growth Always A Good Thing?
    Markets

    Is Growth Always A Good Thing?

  4. How To Use Price-To-Sales Ratios To ...
    Markets

    How To Use Price-To-Sales Ratios To ...

comments powered by Disqus
Hot Definitions
  1. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  2. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  3. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  4. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
  5. Gresham's Law

    A monetary principle stating that "bad money drives out good." In currency valuation, Gresham's Law states that if a new ...
  6. Limit-On-Open Order - LOO

    A type of limit order to buy or sell shares at the market open if the market price meets the limit condition. This type of ...
Trading Center