Struggling to source / originate deals?
Work in corporate development for a sponsor backed company and we are really having trouble originating deals. LMM company in a somewhat niche but growing industry.
Most of the firms we approach are not interested in selling or decline to speak with us / don't respond altogether. We are doing all the traditional outreach - emails, LinkedIn, sending letters, attending conferences but just seems like there is zero appetite for M&A.
Anyone else having a similar experience?
1) If you're trying to do proprietary deals, will be very hard to get a founder to bite without any sort of relationship. You really want to develop a longer term rapport / communication flow before you can expect them to be open to selling their business to you. You have to remember these businesses are the baby of their founder. Would you be offended if someone you never met, had never built a relationship with, and barely knew of asked if your baby could come live with them?
2) Sending letters in 2022?
3) If you really want to start doing deals you're going to need to go through brokers. Given your size, these don't need to be the BBs and EBs of the world. Literally find any small / regional / internet based broker and ask to get on their email list. Even better if you can find one that specializes in your industry. With these you know the target has some willingness to sell and it will still fly under the radar of most PE firms so its not like you're bidding a broad auction. Google "sell my business" and you'll find tons of these sites. Have to sort through the shit to find the diamonds in the rough of course.
A few thoughts from someone who has done a lot of sourcing:
What industry? Feel free to PM me.
Original poster here, appreciate all the well thought out responses.
I think our team and the sponsors expectations were unrealistic for this industry. The points made above about relationship building are spot on, our firm does not have many relationships in the space so we can’t tap into our sponsors / founders network to generate deals where the trust is already there. So in many cases we are building the relationship from scratch.
PM me to discuss the effective deal sourcing
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