What is Trade Sale?

Definition

A Trade Sale is an exit transaction in which a company is sold to a strategic buyer, typically another company operating in the same or a related industry.

Unlike a secondary buyout, where ownership transfers between financial investors, a trade sale usually occurs because the buyer expects strategic benefits such as synergies, market expansion or access to new capabilities.

Trade sales are one of the most common exit routes for private equity investors and shareholders.

Why it matters

Trade sales can often generate attractive valuations because strategic buyers may be willing to pay for synergies and long-term strategic benefits.

In practice

A private equity fund may sell a portfolio company to a larger industry player when the business has reached a scale or market position that makes it strategically attractive.