What should a self funded searcher's expectations be about securing soft commitments pre-LOI?
I'm looking at deals between $500,000 and $1,500,000 EBITDA and EV between $1,000,000 and $3,000,000.
I began my search last year and messaged a couple of investors pre-LOI and simultaneously kept searching for deals, refining my deal criteria, developing and systemizing my search process, and learning every day. I ended up messaging dozen of investors but gained virtually zero traction which was not good but okay since post-LOI interest would be the better bet so I kept going.
I got under LOI on a deal that was a great fit for I was looking for and got family and investor backing. Post-LOI was the better bet than trying for the pre-LOI soft commitments.
The wise thing to do is 'start relationships early' in the search because it's what a prudent searcher does to avoid heightened risks that come with starting from square 1 to fund a project in post-LOI; but even last year when I messaged dozens of investors I wan't able to get one intro call from that sample of about three dozen. The sample size isn't big, but what expectations should I have or what information should I be sharing in my initial outreach that would be helpful as I continue I moving forward? Thank you so much in advance!
Self funded search pre-LOI funding risks
by a searcher
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No worries Glenn, it's great to see a diverse set of point of views on the question I posited! Potential capital partner and searcher partnerships are wise in taking such a position of building a relationship early which was my intention with those initial outreaches I made (including any future ones as well!), seeking to say hello and learning more about one another.