Maximizing Value from Unsolicited Acquirers’ Marketing Calls

Why are businesses getting so many calls from prospective acquirers? And, more importantly, what should a business owner do to take advantage of such interest now or in the future?

I have received several calls from clients recently who are being contacted directly from buyers or a buyer’s representative. These clients are in the process of developing their Master Exit Plan® and they are not quite ready to go to market.

The calls I receive are a bit frantic with clients asking, “They say they have “thee” buyer, are we missing a great opportunity?”

First, I assure you that the buyer that calls our client directly has never been the buyer when we run a formal M&A process and actually consummate the transaction.

Second, one buyer is no buyer. Period. We run a formal process so that we engage with multiple buyers at the same time which gives us leverage.

I had a chat with Joe Sands who is our key mergers and acquisitions leader and this is what he had to say about the current market… 

Over the past 15 years and especially in the last couple of years, private equity groups have really stepped up their ‘business development’ efforts to include mass cold-calling and emails to business owners. Granted, they are well funded and sophisticated potential acquirers worthy of making you flattered at their interest in your business, but some say they are creating a level of market commotion/confusion or are even disingenuous in their initial expression of interest via cold marketing campaigns.

The reason for this vast increase in interest is that private equity groups have grown in size and number of firms, which is creating a higher level of competition for getting enough potential deals to pursue for each firm. In addition to private equity firms, there are callers that don’t actually have a fund from which to invest including – “fund-less sponsors” (at least they are honest) otherwise known as “independent sponsors” (not as transparent), “search funds” and other ‘wanna be’ acquirers. So, it’s easy to see why this would cause a lot of confusion and distrust by the business owners getting these calls. But no business owner wants to miss a ‘real’ opportunity.

As a former 4x business owner, last one being about 7 years ago, these calls used to be with senior people at a funded firm, who had done their homework on my business and industry, and it was clear that it was a specific genuine interest in my business and not a marketing cold call. That’s changed substantially.

Today’s business owner should tread more carefully because whether you own a business that’s large or small – you are likely getting calls regularly from “interested acquirers”. While this may seem very exciting and flattering, at least initially, take heed in what your next steps should be because over 95% of the time, these inquiries don’t end up with a consummated transaction for the business.

The usual scenario is that the call received was one of many calls made that day on cold call fishing expeditions to business owners seeking any form of exit interest. Once the caller finds a business owner that shows a level of interest in an exit, then the suitor will begin the process of looking at the business to see if they really are interested in an acquisition or investment in your business.

The downside, as the business owner, is that you may end up spending a lot of time spinning your wheels with your team, advisors and the potential acquirer only to have spent a lot of money and time with no deal and perhaps taken your eye off the business operations. That’s serious damage to sustain.

But whether it’s just receiving a call or going down the path a bit, it usually makes a business owner think if it’s time to start considering a financial partner, a successor or an exit. This should lead the business owner to exploring whether the business and its owners and team are ‘ready’ for a transaction.

Here at Legacy Partners, we create a Master Exit Plan® that addresses an owner’s business, personal and financial goals – ensuring that the owner is prepared to exit when the time is right and buyers are active.

Every business owner deserves unbiased advisement from a team that will protect and guide them through a successful exit. Legacy Partners’ team of advisors have the expertise to drive your deal and navigate you through your exit into your next chapter with ease.

Most owners only sell one business in their lifetime and it is the most significant financial decision they’ll ever make. Don’t leave it to chance. Contact us here to begin the process.

About Joe Sands:

Joe Sands is an investment and merchant banker with over 25 years of experience in mergers & acquisitions, capital raises and strategic advisory services. He is a Managing Director at Corporate Finance Associates, a 65-year-old global middle market investment banking firm, where he serves as the head of the Consumer and Multi Unit Retail Practice Group. Joe also serves on several other industry practice groups at the firm. Over the course of his career, Joe has completed dozens of transactions across multiple industries, aggregating several billion dollars of transaction value. He has also been an owner/operator of four middle market businesses over his career, which he exited as a principal. Joe speaks to business groups & associations around the country and authored the Exit Planning Institute’s exit planning certification program (CEPA) on Third Party Sales of a Business. Joe can be reached at Securities offered through Corporate Finance Securities, Inc., Registered Broker-Dealer, Member FINRA and SIPC

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