How Many Shots Are Ya'll Taking?
December 20, 2022
by a searcher from University of Virginia-Darden - Darden School of Business in Richmond, VA, USA
I personally believe in taking a bunch of shots (sending out a bunch of LOIs) but I'm curious to hear what others have done to make the process work for them. When I searched, I couldn't get a signed LOI to save my life for the first six or so months. Then I honed my search and only made offers on stuff that I felt was priced competitively and sent an offer over. I did that like 4-5 times a week and then had two accepted LOIs within a week of one another. Has anyone else had a similar experience of just taking more shots to maximize the chance of landing one? Has anyone succeeded in acquiring sending only a few offers? I'm curious to hear your stories.
from Illinois Institute of Technology in Pasadena, CA, USA
You get to know the owners. You do your homework on the industry. You establish credibility and chemistry. You ask/receive modest diligence/financial info. You make your first in-person visit/facility tour. More credibility, interest and transparency and more chemistry. Then a full diligence list with the caveat not to scare the owners off. LOI explained in person and the reason for the valuation and structure of the proposed deal. Much negotiation. If the LOI is accepted, then QE and first draft rights (yours) for definitive agreements. Further negotiation. Then close. Rifle shots, not a shotgun.
from University of Pennsylvania in Philadelphia, PA, USA
With that said, issuing a high volume of LOIs is probably counterproductive unless you're attempting a programmatic acquisition strategy. Demonstrating true interest and doing the work to understand a target industry / company before issuing an LOI likely leads to a higher chance the seller will sign.