How do you source buyers in small boutiques?

How do you guys do buyer sourcing for $10M - $100M deal range? The universe is insanely huge and I'd imagine not every buyer comes from MD network.

How do you maximize success chances? Do you do cold approaches via e.g. Pitchbook? Mass email corp dev / PE guys?

Just trying to expand my understanding of how smaller places operate (as I'm running a quasi M&A shop myself). 

Comments (9)

Nov 30, 2021 - 4:23pm

Buyers are easy in this market (if you are selling legitimate assets).  Just start smiling and dialing,  hell you can even have an intern do the initial reach out, or the web crawling for PE shops.  Pitchbook is a great place to start for contacts on of the local boutiques I interned at did this.  

  • Analyst 1 in IB - Gen
Dec 1, 2021 - 12:39pm

Work at a LMM boutique and it is a combination of 3 different streams:

  1. Relationships that MDs already have with strategic/PE folks that they like
  2. Researching who is acquisitive in the space/who has a portco in the space
  3. Listing the company on places like Axial and our website

For the first two, we reach out and ask them if they're interested and it is very targeted. For the third, they have to express interest.

My firm is very focused on relationship/fit and doesn't just blast out info. There could be a lot more buyers for our deals but we disqualify quite a few of them out even though they would be good operators/pay top dollar because they won't be a good fit for our client. The MDs have also never sold a company to a search fund and never let them get into our processes.

  • Analyst 1 in IB - Gen
Dec 3, 2021 - 10:17am

Since we're a LMM regional boutique, we rely a lot on word-of-mouth referrals and our reputation of finding buyers that are good stewards of the companies we sell. This is especially so since we do a lot of deals with blue collar companies with unsophisticated founders who don't give a shit about if someone has an MBA from HYPWS. They want someone that won't run the business into the ground, so we look for buyers with experience in the space. The MDs see search funds as too risky as they don't want to get a reputation as the firm that got a buyer who killed the business and spook people away from working with us. A lot of the feedback that we get from clients is that we are the only firm they'd consider working with because previous bankers they've talked with rub them the wrong way by focusing primarily on money and transaction value where we are very relational. We have great deal flow and do almost no pitching because we have such a strong pipeline through relationships, and the MDs don't want to jeopardize that. So, not allowing search funds in our processes is just an extension of the overall culture and strategy of the firm.

  • Analyst 2 in PE - LBOs
Dec 3, 2021 - 5:59pm

Thanks for the great write-up!

One thing that I have personally noticed is that a lot of business brokers and LMM boutiques tend not to think too highly of search funders/self-financing searcher. Do you have any thoughts or recommendations on how someone from the "traditional" search fund background (banking/PE + MBA) could differentiate themselves in sourcing? Would it make more sense for them to focus more on trying to build-up their own proprietary deal flow through directly reaching out to businesses rather than trying to go through a broker? Love to hear your thoughts!  

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Dec 1, 2021 - 4:00pm

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