a) A 1st time buyer typically is leaving corporate America and wishes to control ones own destiny. These may be passive (seeking a good opportunity while others may have very specific industries, geographical areas and/or timelines.
More motivated individual buyers are, the more they’ll pay. However, since they have never purchased a business before, they also tend to be more cautious. They will likely have personal guarantees on their loan, meaning if they do no do well, they could lose everything.
Individual buyers focus on a business’s existing cash flow, determine what their cost of living is and the salary they want, or need, to make. Both the individual and the lender are focused on how much cash flow is left over to pay the loan debt to the lender.
b) A 2nd type of individual buyer is the serial entrepreneur—someone who started or bought one or more companies, successfully transitioned out, and just wants to do it again. They have similar risks and motivations to a 1st time buyer, however they have significantly greater confidence due to prior success. This means that the may be willing to pay slightly more than the 1st time buyer.