M&A Targeting: Tempt Buyers with an Anonymous Teaser - dummies

M&A Targeting: Tempt Buyers with an Anonymous Teaser

By Bill Snow

A teaser is an aptly named document: Its intent is to give an M&A Buyer just enough information (the product, the customers, the problem the company solves, and some high-level financials) to make him want to learn more. Another aspect of the teaser is that it’s (usually) anonymous. Most often, a Seller’s M&A advisor (investment banker or business broker, usually) is the person who forwards the teaser to a Buyer.

You shouldn’t send teasers to Buyers without initially phoning them to have a conversation to gauge whether they have any interest in the opportunity. This method keeps you from wasting your time and theirs. Also, speaking with Buyers means they’ll be expecting your teaser and will most likely give it proper consideration instead of considering it unsolicited junk mail.

If, after reviewing the teaser, the Buyer isn’t interested in learning more about the company, the advisor hasn’t disclosed the fact that a specific company is for sale. No names are divulged until the Buyer signs a confidentiality agreement (CA).

Teasers are obviously not anonymous if an employee of the selling company contacts Buyer. Using an intermediary is imperative if Seller wants to maintain anonymity until a confidentiality agreement is in place.

Anonymity is another important facet of the teaser. If a competitor learns that a company is for sale, it may use that information to spook the common prospects and even steal existing clients of the selling company. Also, all things being equal, if you don’t need to give up a bit of information, why should you?

Another important reason for the teaser is that a slow release of information is often better than dumping everything in Buyer’s lap all at once. If Buyer is inundated with information, he may not be willing to dig in and find the reasons why he should pursue a deal. It’s analysis paralysis. Releasing information slowly makes moving to the next step easy for Buyers.