When I was fielding inquiries for several middle market deals throughout the Southeast US, my firm was also searching for acquisition targets for a PE roll-up. I saw how other M&A advisors handled their process of fielding inquiries, how business owners respond to cold outreach, and how buyers approached me on our live deals. I think it would be helpful to talk a little bit about the human element of this. Because it really doesn’t matter if you have a great thesis, incredible credentials, and an impressive degree IF you don’t approach people the right way. This is about relationships and setting yourself apart from people who want the same thing as you. These are my biggest takeaways on the initial search process and how to approach it mentally. Volume Game, Time Game, Contact Sport This is a game of turning over the most rocks while staying consistent with your decision making process. Others have said it well on this platform and it’s absolutely true. I think of a great investor like Peter Lynch, who knew this to be the case with public companies – those are public companies with SEC-regulated reporting standards. Small and middle market businesses are under no such obligation and there will be quite a bit of analysis involved. Before you can even do that, your job is to gather that information and cross businesses off the list quickly and efficiently. This requires volume, and time refining your processes. If you are not searching full-time, it will likely require some assistance or a longer time horizon. Most searchers fail because they simply didn’t do enough volume and gather enough information. Naturally, as you gather more information and recognize patterns in your search, you will be able to better target the type of opportunities you want while getting bad deals off the table. But remember, every deal is live and you have to react quickly especially in this environment with a lot more competition for solid businesses than even a couple years ago. This mental tug-of-war between being patient and striking quickly at the right opportunity is the biggest challenge to grapple with. This is a Sales Job You are selling yourself just as much as you are inquiring. Not just to the business owner. You are always selling yourself to the M&A advisor/business broker. I can’t tell you exactly how many hundreds of inquiries an advisor is fielding for an average deal, but it’s a lot. The highly-competitive deals that everyone wants bring in even more inquiries (if they are opened to the public at all). One thing that will put off an advisor instantly is entitlement. You are not the only person they are talking to, and speaking to an advisor as if you are entitled to the information and they are serving a customer service role is a surefire way to be excluded. That is not the way this works. The M&A advisor can be your greatest ally or your greatest enemy – and you would be wise to treat them as such. Don’t get me wrong, they should give you the information if you request it. That is the job, but a lot of things “should happen” that don’t. I can tell you first-hand, if you really develop relationships with M&A advisors, they will think of you when a deal fits your buy box. Remember, what does the M&A advisor want to do? Sell the business to a qualified buyer that won’t cause them too many headaches in the process. They understand that you will negotiate, they know you aren’t there to please them, but it makes all the difference in the world approaching advisors the right way. You can put yourself ahead of thousands of other searchers by being prepared, and having resources ready to show them to prove it. How to show them: – Show them you are a qualified buyer – Show them you have funding or can reliably get it – Show them you have a unique vision, not just “I want to buy a business” – Show them your buy box and willingness to move quickly on the right opportunity – Reach back out consistently You are competing for an advisor’s headspace with thousands of other buyers, many of them with war chests to spend. So you have to stand out and make the prospect of working with you frictionless. Off-market deals Your goal with sourcing off-market deals is the same as above, but you should go about it a different way. An M&A advisor is expecting to receive your inquiries about a business as part of their job. A business owner is not planning on opening and responding to your email, and many of them are starting to become overwhelmed with the volume of emails coming in asking about their business. Put yourself in the shoes of the owner. They aren’t interested in reading about all of your credentials or the wonderful things you can do. If you are trying to connect with owners in the trades for example, they are reading your email at 6:40 AM in a truck on a job site and skipping huge blocks of text (and anyone asking them for something without giving them something). They might not be ready to sell for years. Your only job right now is to get them to respond – to turn them from cold to warm. – Ask a question about their business – something you were curious about. – Offer something for free – free resource, whitepaper, information on selling, what the process looks like, etc. – Offer to take them out to lunch instead of offering to book a call. Remember, starting with the ask is just a step too far for most owners, so I recommend you give as much as you can before you ask. They didn’t know who you were, now they do and you didn’t immediately repel them. That’s all you are looking for up front. If you keep doing that consistently, you will find a deal. It takes effort, but it’s absolutely worth it These are just a few thoughts. I help people with this process, using email systems as my weapon of choice, and love to chat if you are looking for assistance in the process. Here’s my booking link: redacted redacted