How to Contact Potential Sellers for an M&A Deal - dummies

How to Contact Potential Sellers for an M&A Deal

By Bill Snow

Contacting Sellers for an M&A deal is easy. You pick up the phone and call. What’s tricky is having a meaningful conversation with a Seller.

When contacting a Seller, you want to speak with the owner, not an executive (even if it’s the president). A high-ranking executive is only an influencer. You need to speak with the actual owner.

Sellers don’t know they’re Sellers. Sellers often don’t even want to sell; you call them “Sellers” simply because you hope they’ll take that role. What they currently are are business owners deluged by calls, e-mails, and letters offering to buy their companies. These communications all say the same thing:

We have money, we have industry experience, we’re different, and we want to buy your company.

The sad fact is that most would-be Buyers don’t realize they say the same thing.

As Buyer, you have to understand that you’re a commodity to Seller. And the more profitable the Seller, the more that statement is true. Sorry if that sounds harsh, but it’s the truth. Those constant calls, e-mails, and letters simply become background noise to a business owner, so you have to know how to cut through the eardrum buzz.

Having a meaningful conversation with a business owner means grabbing that owner’s attention and ingratiating yourself to that owner.

Sending an e-mail or a letter rarely helps you make solid contact with a Seller. Those communications are passive and easy for Sellers to throw in the recycle bin (virtual or otherwise). For best results, pick up the phone and have a conversation.

If a company that isn’t for sale enters into a sale discussion as a result of an overture from a Buyer, that Seller may be in a strong-enough position to negotiate a deal with Buyer.

After all, Seller can easily walk away because Seller wasn’t planning to sell! Seller probably hasn’t retained a full-service investment banker at this point — an offering document isn’t being compiled, research isn’t being conducted — so the expense to Seller is relatively minimal.