January 23, 2024 //
When Market Outreach begins in earnest, there’s a careful juggling act required to keep things moving well. In the previous post, I talked about the step-by-step process we go through in our initial contacts with a prospective client. But remember—at the outset of the Market Outreach phase your team of M&A Advisors will have assembled a list of 150 or more potentials worth taking a look at. Managing multiple possible acquisitions at this stage is tricky work, and you need a dedicated team of people who know what they’re doing, working on it for you.
In this post, I want to focus on the importance of pacing in the Outreach Stage.
Let a child loose in a toy store with no boundaries and no budget, and tell them to pick one thing, whatever they want, but give them a time limit. That will probably end in a meltdown. It’s human nature—give us too many choices and we get overwhelmed.
That holds true for you too, as we start communicating with prospective sellers and the responses begin coming in.
I don’t think M&A Advisors are doing their job well if you’re given too many choices. You will get overwhelmed. If you’ve reached that state, that’s a sure sign that your team:
If your advisors reach out to 500 companies and receive 300 responses, things can quickly get overwhelming.
At Stillwater, we know we’re doing our job well for you if:
It’s worth noting here that your M&A Advisors inherently have a great deal of gate-keeping power at this stage. How can you be sure that the options you’re given are the best? If the flow of information is being controlled, how do you know you can trust the controllers?
That’s a viable concern. I think you can mitigate against that concern only by looking for M&A Advisors who have established a reputation for credibility, trustworthiness, and transparency.
Transparency is an important part of that mix—this is your acquisition after all. At any point, you should be able to ask any question you want about anything that’s going on during the process and get an easy, honest answer. Sadly, these traits aren’t universal in our industry, so choose carefully (and reach out to us first).
An experienced team will help you to juggle prospective sellers intelligently and intentionally by prioritizing the list of contacts. I like to think in terms of stacking them like Air Traffic Control.
Consider a busy airport (and let’s assume for our purposes that it’s running well and not swamped in chaos). At any moment there may be dozens of planes coming in for a landing; it’s Air Traffic Control’s job to stack those planes, and land them in the right sequence. Now imagine if all those planes were directed to descend to 100 feet off the ground and wait for their turn to land at the same altitude as everyone else in the sequence—disaster would ensue. No, those flights will be assigned different altitudes, different holding patterns, and know their place in the sequence as one-by-one everyone is brought safely back to solid ground.
It works much the same with acquisitions. If we ignore pacing at the outreach stage and bring every seller into the process at the same time, we’ve brought all the planes down to the same altitude simultaneously. We’re inviting chaos.
Better to pace the process intentionally. We sort out the top priority prospects from the strong second choices and then reach out to them in the proper sequence. We identify potential acquisitions that may work better as a secondary buy in the future and engage them in a slower flight path that keeps them in sight of the runway. We can land them later.
We work very hard at making positive, successful first impressions with everyone on your list, no matter how far down in the landing sequence they may be. If we’re only focusing on The One Perfect Acquisition for now, we run the risk of alienating businesses that might have been ideal in the future. If we establish our credibility and make a positive impression on every single possibility, we can stack them all in a landing pattern and bring them all in one by one when the time is right.
Pacing is crucial, and it’s a skill your M&A Advisors must have if you want the best possible results when the final deal is signed.
The acquisition process is intricate, complex, and difficult. Every single step demands multiple skills running at peak performance to succeed. Make sure you bring together a team that gets it.
At Stillwater, we haven’t built our success off of quick slash-and-attack acquisitions, we’ve built it on a legacy of experience, of caring about mastering the little things that make things work at every step of the way. We know that something as simple as pacing the progress of the Market Outreach stage is worth mastering. The little things pay off in the long run.
Start a conversation with us about your own acquisition plans here. Things end better if they start at the right pace.
Written by: Douglas Nix