Takeaways after searching for 9 months in Montreal

Hello everyone, It's now been 9 months since I left my job in private equity and started searching full time. I wanted to share my experience for others to see and hear your comments on how I could improve going forward. I am based in Montreal and I am looking in my area, hence my takeaways might be very Quebec-specific for my peers down south. ---Top of the funnel I contacted roughly 700 companies in direct outreach, below are the main techniques I've used: -Apollo: 350 contacted via email, I received very poor ROI (about 1%) and I have found that their email system tends to hurt your deliverability in the long term -Direct email: 200 contacted, 10% response rate and 5% interested. Satisfying results, but I put a lot of effort looking at ownership structures online. I wanted to automate this process to increase volume. -Direct email through a software built with Claude (thanks to Nic my top-notch intern who built it): 150 contacted, same response rates of 10% replied and 5% interested -I cold called maybe 100 of the above after a sequence was completed, but I found that I receive better ROI on my time via cold emails. Most answers I received come on the first email surprisingly. I leveraged a network of about###-###-#### business brokers in Montreal and I ping them every 1-2 months to see if they have new mandates. This has yielded a bit over half of the companies that I have found ---Middle of the funnel I advanced with over 60 companies which means signing an NDA and receiving their financials. I would say half of them are discarded right away due to: i) financial results swinging massively, either selling on a bad year because they are exhausted or selling on a breakout year where results are unlikely to hold, and ii) owners are open to sell, but only at an unreasonable valuation and tell you right away. ---Bottom of the funnel I submitted 4 LOIs and all have failed for different reasons. I usually negotiate the structure of a transaction and the payment before submitting a LOI, I know other searchers tend to send LOIs very quickly but that's not my style. Here's what happened to them: A. Competitive brokered deal, a strategic in the sector ended up bidding higher B. Referral in the pest control space where after 6 months of negotiation the owner requested to retain majority ownership. He was in no rush to sell while I didn't want to acquire a minority stake and we parted ways. C. Brokered transaction where the company had to reclassify inventory costs, leading to a decrease of 20% in EBITDA and a corresponding lower valuation the owners didn't appreciate D. Transaction with a broker where the owner was looking for a price that could not be financed, however the broker didn't have a retainer and the seller walked away. ---My takeaways 1. We hear there are tons of boomers that want to sell their companies, I don't think that's true. A lot of them have lifestyle companies that they are happy to hold to their grave. If the company runs on autopilot, why sell? Others have companies that would be hard to finance, hence hard to acquire with debt. 2. The owners who were smart enough to build a successful business have usually already thought about succession and planned for it. 3. Some owners tend to value continuity and keeping their employees on board post succession, but they are a minority. Most owners want to maximize their payout because their business is their retirement fund and they are mostly concerned with price. 4. Strategics and financials are fierce competition and sometimes owners use searchers as price discovery tools to find out how much their business is worth and will shop around with your LOI to see if they can get a higher price elsewhere. 5. AI tools are useful for sending emails, but you need to keep a close eye on what's happening since they can damage your email deliverability if you are not careful. 6. If you work with brokers, ask if they have a retainer with the target and adapt your commitment accordingly. I've seen situations where owners could and did walk away late in transactions because they decided to play hard ball. 7. We heard this all the time, but never stop sourcing even if a transaction is advancing. You need to have alternatives if the owner decides to renegotiate the deal late in the process. I am hopeful I will be able to find a company, right now I am considering broadening my criteria to acquire something smaller first and continue looking while operating it. Happy to discuss with others and see what you think of my takeaways, have you faced similar challenges in your search?