The Crux of the M&A Dating Game

Twenty years ago, phone calls and personal meetings were the best way to present investment opportunities. Today, people do not have time to invest in phone calls or meetings unless there is a reasonable likelihood that it will be productive. Therefore, you really can’t reach anyone unsolicited over the phone and certainly can’t book a meeting with them.

You must contact them by email, and your entire chance of hooking the interest of your target depends on the content of your email.

First, it must be professional, well-written, and contain no typos. Second, it must be brief. No one has time to read through a lengthy email. They’ll delete it just on the basis of length. Third, it must hook the reader with a powerful message that engenders their greed, or in some cases fear (e.g., “if someone else buys this company, that combined company could represent a threat to my company”). Finally, it must inspire action, which is an email response or phone call.

In our case study involving the sale of a pet services company, the owner might craft something like this:

We understand you may have an interest in the pet services industry. My business, established 10 years ago, has grown at a compounded annual rate of 20% since inception. We have been an industry leader in all respects, including technology, operations, marketing, customer experience. We are currently exploring our strategic alternatives and invite you to contact me at patsy@ppp.com or (555) 555-5555 if you would like to learn more. Thank you.

We suggest not stopping with one email. At a certain point, you risk really ticking someone off with repeated unsolicited emails, but we know that many emails are never read because they are automatically routed to spam, ignored, or misunderstood. So, we suggest three emails. If they haven’t responded to any of those, they aren’t your buyer.

Here is a template for a first follow-up email:

Hi! I recently sent you an email describing my pet services business. Established 10 years ago, it has grown at a compounded annual rate of 20% since inception. We have been an industry leader in all respects, including technology, operations, marketing, customer experience. We are currently exploring our strategic alternatives and invite you to contact me at patsy@ppp.com or (555) 555-5555 if you would like to learn more. Thank you.

And a final email:

It is not my style to pester anyone with emails, but just in the event my prior emails regarding my pet services business ended up in your spam folder, I am sending one more email, after which I will not contact you again. Established 10 years ago, my business has grown at a compounded annual rate of 20% since inception. We have been an industry leader in all respects, including technology, operations, marketing, customer experience. We are currently exploring our strategic alternatives and invite you to contact me at patsy@ppp.com or (555) 555-5555 if you would like to learn more. Thank you.

For those that respond to your email, and express an interest in a phone call, we strongly advise making it a video call. Although not as effective as an in-person meeting, it has become, since the pandemic, a very effective medium, more effective than a mere voice call.

And prior to that call, prepare, prepare, prepare! Prepare concise answers to the most expected questions. No busy potential buyer wants a lot of superfluous detail. They simply do not have the time or patience. They would rather pass on the deal than be bored with detail they don’t want.

We can’t list every potential question every potential buyer will ask you. But we can list the major categories, and you can prepare a list of the most likely questions, and your responses, in each category:

·      Formation and history

·      Ownership

·      Objectives

·      Strategy

·      Product or Services

·      Market and Competition

·      Management

·      Operations

·      Sales and Marketing

·      Financial

·      Human Resources and Employees

·      Compensation

·      Insurance

·      Facilities

·      Major Contracts

·      IT

·      Proprietary Technology or Rights

·      Regulations

·      Environmental

·      Partnerships

·      Customer Care

·      Quality Control or Assurance

·      Litigation

·      Tax Returns

·      Acquisitions and Dispositions

GROW and SELL Advisors, wholly-owned by Traversi & Co., LLC, is a premier sell-side M&A advisory firm – a boutique investment bank – serving the lower middle market.  Visit us here.

For a short video clip on this topic, click here.