2 Best Ways To Find Motivated Sellers, Off-Market Deals

And, I have nothing to sell you.

I'm a physical therapist and in-home PT business owner in NYC. I'm currently acquiring physical therapy businesses in NYC and NJ, and we have an outpatient PT business under contract now in NYC.

Even though you'd think it would be a little easier for me to contact my fellow PT practice owners to buy some or all of their practice, it has taken a lot of effort. And, if you are looking to contact owners of service-based businesses, I believe this strategy can work for you on a fairly low budget.

For context, I'm contacting and speaking with business owners with annual revenue ranging from $1m-$6m. Plus, I have assembled a board of 4 total members, including a forensic accountant and 2 healthcare/industry experts with a track record of completing hundreds of healthcare transactions. This has been a self-funded search. I haven't raised money from the board members, because they're "paying" me with their time, wisdom, track record, knowledge, and pragmatism. We recently retained a law firm as we enter due diligence.

This is just my experience below.

Whether you or an intern or VA perform outbound strategies to find motivated sellers and build a pipeline of motivated sellers, here's a few things that have not worked for me:

- Cold calling,
- Cold emailing.

Here's my #1 strategy that gets business owners to call me:

- Mailing them a 1-page letter (yes, old school... paper, envelope, stamp).

I currently have a PT business under contract and a pipeline of 9 motivated and semi-motivated sellers in my pipeline. Yes, in the age of technology, sending paper letters through the mail sounds absolutely ridiculous. More on than below.

Why does a 1-page letter work so well?
- It's different than the 300+ unopened emails these owners have in their inbox,
- The letter is usually opened by the actual owner - the Decision Maker!
- Even if they have a secretary filter their snail mail, my letter looks legal/official, so my hypothesis is that the secretary doesn't open it and puts it on the boss' private pile of mail for them to open on their own,
- For return address, I use my street address but do not include my name on the front of the envelope,
- Therefore, the owner doesn't know who sent the letter (possibly causing some intrigue and interest to open it),
- In the beginning, I hand wrote/addressed the front of the envelopes,
- Then, I bought custom labels from Shutterfly with my return address only; without my name on the return address,
- 70-85% of the letter needs to speak to what the owner/decision maker cares about,
- The rest can be about you and why you/your team would be a great option buy their business,
- Owners don't care about you or your intro - at least in the beginning,
- Owners care about their loyal staff, their customers, their reputation/legacy, exit strategy, succession plan, retirement/next chapter of their lives, spending more time with children/grandchildren,
- So, I built a small mailing list manually from Google Maps,
- Eventually, once letters had proven to work, I bought a mailing list of target companies across NY and NJ (physical therapy and home health),
- Set up and paid a mail shop to start mailing letters with 2 versions, both being 1-page letters,
- Version 1 was a brief intro, why I'm contacting them, and my vision/goals for acquiring companies for our roll up strategy, and how it can be a win-win,
- Version 2 was a follow up 1-page letter with almost identical wording as v1
- Here's the catch... mailing just one letter won't typically work,
- Each owner needs to receive at least 5-6 of your printed letters,
- Some owners called me after receiving just one letter (maybe I got lucky),
- Many owners called me after receiving 5-10 of my letters,
- You need to get out of obscurity and show owners that you're serious and organized,
- Next, I paid the mail shop to send out my letters EVERY 14 days,
- Ran this campaign for about 6 months in 2021 and it built a great pipeline,
- Owners received V1, and then 14 days later they'd receive V2, then 14 days later they'd receive V1 again, and so on,
- You could literally send the same letter version multiple times to the same owner,
- Not a single owner complained to me about the volume of letters I mailed them,
- Several owners did remark "I have received several of your letters...",
- Ask them: "Why did you respond to my letter? Was there anything specific in my letter that compelled you to call/email me today?",
- Yes, this takes a budget of hundreds to thousands of dollars if you use a mail shop,
- Cost: stamps $0.40 per and around $1 to $1.50 per letter printed, stuffed, addressed, mailed,
- Initially, I measured a response rate, but stopped measuring once it worked, and I transitioned to following up with multiple owners, and organizing their NDAs, financial documents, etc,
- If you don't have a budget then you can type of the letter in Google Docs, print it out, stuff your own envelopes, smack a stamp on them, and mail them out yourself.
- How bad do you want do you want this?
- How bad do you want to buy revenue rather than create revenue from scratch?
- This is what separates the wantrepreneurs from the entrepreneurs. No excuses.
- If you manually mail out 50 letters to 50 different owners, and get zero calls/emails, then your copywriting sucks and the letter did not include any emotional triggers that middle aged/older business owners care about.

*Call to action in the letter: "Call me directly using this phone number or email me at this email address. This is the BEST part about mailing letters to owners, because they contact YOU. The authority and influence in this dynamic cannot be understated. They are reaching out to you! When owners contact you, they are in a slightly vulnerable position. They are figuratively raising their hand and saying "I'm interested in potentially selling my business." At that very moment, you have the upper hand.

When cold calling a business owner, if you can get them on the phone -- they have the upper hand. They have not figuratively raised their hand to identify themselves as someone who may be interested in selling their business. Therefore, they are in the position of authority and influence, because at that moment, they're not vulnerable.

My #2 strategy that gets business owners to call me or respond:

- Sending owners cold, concise LinkedIn messages ("InMail")

(Sending messages via LinkedIn Sales Navigator - it's like $87/month.)

If you can't afford it, you can send owners a LinkedIn connection, and write a very short personalized intro. Or, you can send the connection request and then wait until they accept your request. But, some may never accept your connection request. Which is why it's better to just pay for Sales Navigator "InMail."

It takes money to make money.

Any way, in my experience, sending cold Linkedin messages via Sales Navigator has a vastly better response rate compared to cold emails. Same when comparing with cold calls. I believe it's because the owner can see your message, your headshot, easily click over to your LinkedIn profile, see mutual connections, etc. That's the beauty of LinkedIn. Optimizing your LinkedIn profile is a whole other conversation.

And, you may be asking "What do you send owners in the cold LinkedIn messages?" Yes, you guessed it -- I send them the exact 1-page letter. Due to character limitations on InMail messages (I think 500 characters is optimal), I sent slightly variations of the same letter even if that owner also received the printed letter in the mail.

What works best right now? Using #1 and #2 at the same time.

What's next?
- Just launched a show/podcast called "The Dave Kittle Show",
- Why? It's content marketing to get in front of more PT/healthcare owners,
- This will further build out our future pipeline of motivated sellers and off-market deals,
- The content will be so good that we believe owners will consume the content and some percentage of them will contact us and only want to sell to us, rather than to a corporate or other buyer,
- Remember, off-market deals are the best for us,
- I'm publishing free, helpful content for physical therapy practice owners and healthcare business owners -- answering their burning questions like "How can I sell for top dollar?" - "What's my EBITDA multiple?" - "Do I need a broker or not?",
- Have already interviewed PT owners who sold to other buyers in the last couple of years,
- I'll also be interviewing attorneys, accountants, my board members, financial advisors, brokers, and any M&A professional who is looking to share valuable content for service-based business
- Recently published on iTunes, Spotify, and YouTube,
- Cost: outsourcing all podcast and video editing, publishing, and marketing materials to an agency who charged me $3K upfront and then $1,300 per month.

All of these costs are close to nothing when our goal is to scale to $100m in revenue as soon as humanly possible.

Again, I have nothing to sell you.

If you're an M&A professional or have a track record of buying or selling service-based businesses, including but limited to healthcare, and you think you'd be a good fit for a potential interview on my show "The Dave Kittle Show", feel free to reach out. No cost, no catch.