Unsolicited Interest Approach

April 29, 2020

by a searcher from Harvard University - Harvard Business School in Pittsburgh, PA, USA

All - I'm interested to hear how you have approached potential targets that have not (yet) shown interest in selling. What approaches have been successful to facilitate a productive initial conversation? What approaches should I stay away from?

Thanks, all!! I appreciate the power of collective experience in preventing additional scar-tissue!

Best,
Brad

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Reply by an intermediary
from Indiana University at Bloomington in Carmel, IN, USA

I agree with Tom as well as you have to get pass the gatekeeper and when you do, have a compelling case for them to listen. 80% of the businesses that sell are not listed, usually because they do not want to pay a high sell side fee and most importantly, they are scared to death of confidentiality leaks. As well as many have been approached by individuals who in the past have been tire kickers, looking for the perfect business at a discounted price. So they have wasted time and generally are very leery of an individual approaching them. On smaller deals, the #1 driving force is selling to someone that they like and that they feel will take care of their "baby". SearchFunders often have PE type names, XXX Capital Partners and often this is an immediate turnoff as they believe, maybe incorrectly, that you are a PE firm and not looking to buy and hold.

Reply by an investor
from Illinois Institute of Technology in Pasadena, CA, USA

Recognizing the most companies are not "for sale", the best overture will be one where you do your homework. Why are you approaching this firm? What do you know about the industry and specifically about this firm that will endear you to the shareholders? Can you suggest your plan that shows how you will grow the company after it is acquired? Why do you think this firm is better than its competitors? What do you know about its strengths and weaknesses? Use any insider-type information you might have that shows you know the business and this company, etc. An unsolicited overture without homework will generally never get a response.

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