Both novice and experienced deal makers should have one key goal in mind: Proprietary Deal Flow. The ability to stay out of an auction process should keep your multiple down along with being better able to dictate the deal timeline.
For the most part, private equity firms and large corporates have experienced employees calling business owners to see if they are willing to sell. Smaller firms and individuals generally lack the bandwidth and experience to do such outreach. Additionally, smaller enterprises will also likely benefit from advisory services to help navigate the countless nuances of a transaction.
Retained buy side search can give you access to a proprietary acquisition search at a fraction of the cost of hiring full time employees. During the search, your advisor will help you understand the market dynamics and participants within your chosen market. Also, the advisor can help you with financing options to better understand your budget.
Once the target list is identified, your advisor can begin the marketing process. This may include several rounds of letters, calls, emails and social media efforts. The goal of the outreach is to understand which companies in your target market are open to selling and because advisors are a third party, business owners are much more receptive to taking calls.
After an initial screening of the selling company, arrangements are made for a buyer/seller meeting. This will be the buyer’s best chance to build rapport with the seller, which will be invaluable as the deal progresses. If the deal is of interest, the advisor can request financial information, perform a valuation, outline structuring alternatives and begin drafting a letter of intent (LOI). Many times, advisors will help negotiate the LOI and assist with due diligence activities.
Overall, a retained buy side search will help position a buyer to find the right target at the right price. It all starts with having proprietary deal flow and the right advisor to see the details through all the way to the closing table.
Sun Acquisitions is a Chicago based M&A firm specializing in helping businesses confidentially buy and sell privately held firms. Our team is comprised of certified business intermediaries with deep transactional knowledge and experience across a broad range of industries. Our Advisors have experience working on hundreds of due diligences for small and middle market transactions.
Let our team of Advisors and former Corporate Development Professionals help drive your business to the next level. Contact Sun Acquisitions for a free consultation at [email protected].