M&A Buyers: How to Start a Target Call to a Potential Seller - dummies

M&A Buyers: How to Start a Target Call to a Potential Seller

By Bill Snow

If you immediately come out and say, “We want to buy your firm,” when contacting a potential M&A Seller, your approach is no different than the myriad other Buyers who have approached this owner.

But that’s just the beginning. Here are a few more guidelines that can help you make the most of your call:

  • ’Fess up. Simply saying, “I know you get calls like this one all the time” is a great way to acknowledge that you understand and respect the Seller’s situation.

  • Keep it conversational. Be willing to steer away from business. Talk about sports, the owner’s kids, your kids, your crazy neighbor, music, travel, anything. If you show genuine interest, you show you’re a real person, not just someone reading a script and dialing for dollars.

    You have to truly enjoy these conversations. If the talk eventually becomes a serious acquisition conversation that leads to a real deal, you need to have a rapport with that business owner during the process and perhaps after (if the owner is staying on board as an employee), and faked camaraderie is no way to achieve that. You and the owner have to play well together for real.

  • Get the other person to talk. You don’t want to have a one-sided conversation; you want the other side’s input. A great technique is to simply tell the owner your acquisition thesis (your idea for combining the businesses) and ask whether it makes sense. Get her opinions on this thesis and let her showcase her expertise.

  • Be honest. If an owner asks, “Are you looking to buy my company? I’m not interested in selling,” simply reply with the truth: Yes, you’re acquisition minded. You can add the caveat that specific talk of an acquisition is premature because you don’t know her interest or even whether the company would be a right fit. That’s why you have these conversations: to determine interest and fit.

  • Ask killer questions. These big questions quite often start a deluge of information and sometimes end in an M&A transaction:

    • What do you want to do?

    • What are your goals?

    • Where do you want to take the business?

    These questions may seem simple, and they are, but if you pose them in the right way, they can get someone to go beyond her current day-in, day-out grind at the company and get talking about life after work.

    When you’re trying to buy a company, understanding what the owner wants to do in retirement and when she is thinking of retiring are some of the most important bits of data you can collect.

If you can successfully engage an owner in a conversation, at a minimum you’ve made a solid business contact who will take your call in the future. At best, you have a viable acquisition target.

Not all calls go swimmingly. Despite your best intentions, some owners hang up on you (sometimes after telling you exactly what to do with your acquisition-minded company). Be prepared to handle rejection.