My experience working with Buy-side M&A advisory in Canada
May 29, 2024
by a searcher from University of Windsor in Vancouver, BC, Canada
I have engaged a buy-side M&A advisor in Toronto (SG) and would like to share my takeaways from that engagement so other search funders don't fall into the same trap.
This Toronto-based M&A firm claims to have completed numerous deals and is active in the Searchfunder community.
I paid an initial retainer plus an ongoing advanced retainer (billed quarterly) to get started. They claimed to have over 75,000 contact information of business owners, advisors, and others in their CRM system. They said they could provide qualified leads that fit my search criteria in just a few weeks.
As I conducted an industry-specific search, I provided them with both the NAICS and SIC codes of my target industry to refine the deal flow. The goal was to conduct a proprietary search by contacting business owners who met the search criteria.
Shockingly, I have not received a single lead or qualified deal flow from them over the course of the entire engagement. All I got from them was a brokered deal that was already public on businessesforsale.com. So, I contacted the firm's president (K.S.) and asked for a progress check meeting.
Upon meeting with their search "team," I noticed that some interns with no experience have been assigned to this project. They have no clue how to generate deal flow and have not done a single outreach to any of the proprietary leads they were supposed to contact. The level of their unprofessionalism was beyond believe. They relied on leads coming from other M&A firms. You might wonder why you would need a buy-side advisor that will eventually costs you $100K++ (post closing) if all they can do is relay the leads that are already in the market instead of generating proprietary leads!
After over 90 days of wasted time and money, I terminated the contract and requested a full refund, but they refused to comply.
I wanted to share my experience here so other search funders, especially in Canada, don't fall into the same trap. I don't disagree that there are good, credible M&A advisors out there, but be very careful in vetting them so you don't lose your money and time on unprofessional scammers.
Cheers,
MM
P.S.: Name of the M&A advisory firm is Shaughnessy Group (https://shaughnessy.group/).
from Ohio State University in Seattle, WA, USA
One way to help alleviate that problem would be for them to commit to a minimum number of deals per month to review within your criteria or your money back. I just used a fantastic firm (Rainier Search Partners out of Washington, USA) that even though we didn't put a number in the contract, they put together 3-5 deals for review a week and told us to expect 20 or so a month minimum. They kept their word.
Also helps to know people who have used the firm before and get an honest review before dishing out the retainer. Happy to provide a connection or give more detail if you message me.
from University of Toronto in Toronto, ON, Canada
However, I agree with ^redacted above: "I can't fault only the useless advisory firm here".
First, there were apparent due diligence lapses on the part of the Anonymous Searcher going into this situation. The Anonymous Searcher says that Shaughnessy claimed to have "over 75,000 contact information of business owners, advisors and others". However, Shaughnessy's website clearly indicates on its Home Page that its "Relationships" comprise "global contacts at over 35,000 companies", of which only a small fraction would logically relate to the Anonymous Searcher's Canadian search. In addition, the Anonymous Searcher indicates that he relied on Shaughnessy's "claim to have completed numerous deals". Did it not seem strange to the Anonymous Searcher that all of the purported deal tombstones on their website give none of the usual identifying information concerning the amounts, parties, dates or industries of the transactions? Did it not raise red flags when the Anonymous Searcher clicked on the "Tear Sheets" button on their "Acquisitions" page, which should give information about their deals, but instead the link goes nowhere (i.e., they have no information to provide)?
The Anonymous Searcher "paid an initial retainer plus an ongoing advanced retainer....to get started" for leads that Shaughnessy apparently promised to provide "in just a few weeks", but then waited through 3 months of non-performance before having a "progress check meeting" with Shaughnessy's President. Then the Anonymous Searcher complains that he couldn't get a refund of his fees, which indicates that the advisory contract did not contain clear deliverables, timelines, a performance monitoring/reporting mechanism and remedies for non-performance (i.e., a refund). In other words, the advisory contract lacked all the attributes of a proper advisory contract. The Anonymous Searcher put this inadequate contract in place and then his passive management of the relationship allowed the problem to continue until it was out of control.
This is unfortunately a failed engagement, but it's not a one-sided story. One old adage says: "Buyer beware". Another one says: "Buyer be smart".
Lastly, ^redacted, this post highlights concerns that I have had for some time about anonymity on Searchfunder.com. Anonymity in general on social media platforms fosters inappropriate content. This Anonymous Searcher makes serious allegations against a company that he says "is active in the Searchfunder community", so he knows that his post will cause significant reputational harm to Shaughnessy, but he isn't willing to stand behind his allegations by putting his identity forward to verify the veracity of the allegations.. That speaks volumes, and indicates that caution is warranted when assessing and responding to these allegations.