Industry Experience Discussions With Sellers

searcher profile

January 27, 2023

by a searcher from Indiana University, Bloomington/Indianapolis - Kelley School of Business in New York, NY, USA

Hi All,

I come from an IB and PE background and am searching for an acquisition in the core industries I've focused on in the past. Whether or not it's a fair assessment, some sellers only want to sell to a strategic as they believe it would be too difficult for someone to learn their business. I've had this conversation on a few occasions with business owners I sourced through proprietary outreach, both with businesses that genuinely are complex as well as those that are actually pretty simple. How have you typically positioned the conversation and have you had any success getting business owners to continue discussions?

For what it's worth, my approach has generally been to highlight my prior industry investing experience and then also will provide some information about my advisors. Most of the time, once I provide some credibility they take the conversation seriously, but for a few owners they just don't view that as relevant. Look forward to hearing everyone else's thoughts.

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commentor profile
Reply by a professional
from University of Nottingham in London, UK
The perceived credibility gap for searchers from a non-operating background is something that we see a lot of and is sometimes difficult to overcome. I would say the best steps to tackle it are to use industry specific terminology in your discussions to highlight your understanding of the key issues, reference transactions you have previously been involved with (ideally those with the best name recognition) and also lean on the credibility your investors provide.
commentor profile
Reply by a searcher
from Indian School of Business in Raleigh, NC, USA
I've faced this issue a number of times but no silver bullets. I've been a consultant and can learn new industries quickly, but buyers don't seem to get this, and instead seem to expect someone with 10+ years in their specific industry segment. It becomes even more visible when you place a revenue contingency on the seller note! George's advice above sounds sensible as a first step though...
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