The Big Funnel

We start the Market Outreach Stage of the acquisition process with a list of prospects that in some way fit what you’re looking for. Your Advisors have done their work in the preparatory phase and have developed a good picture of you and your company—your acquisitional capabilities, what you’re looking for, and an idea of how you’ll be perceived as a buyer once you face the market. Once that’s done, they turn that inquisitive spirit outwards and begin looking at the market. From that first survey, your advisors will generate and then present you with a first list of 100-150 names of prospective buys.

We call this first set of names The Big Funnel. A list that long would take forever to get through if every name were given the same scrutiny and consideration; it is our starting point. We think of it like a funnel—a quantity too large to work with practically. Still, we know that if we drop 150 serious possibilities into the top, then the 30 or so that trickle out the bottom after another round of analysis will be worth looking at.

We eventually repeat the process with the small funnel of 30 names and finally have the ten finalists we know should be investigated and dived into with energy.

But how do we fill The Big Funnel in the first place? Where do those first 150 prospects come from?

Over the years at Stillwater, we have invested time and resources heavily into developing proprietary systems that give us a superior edge in how we search the market. I’m proud of those systems—they produce unmatchable results—but you won’t find me describing them in detail here. There are some general avenues into the market that I can talk about, however.

Stillwater works from an extensive pool of resources that help us pinpoint the kinds of acquisitions you’re looking for:

  • We use huge-scale in-house and paid databases to get the most comprehensive view possible of the state of the market and its available properties. Experienced wranglers of data sets of this size use tools to help us narrow the focus to match your strategic requirements.
  • Industry associations not only lead us to potential names in the right sector but allow us to keep up-to-the-minute on trends and motion in specific markets.
  • We belong to a larger M&A Organization, which keeps us networked and allows us to gather further intelligence.
  • Much of this survey work gets done at a more on-the-ground, grass-roots level. We’ll talk to companies we personally know and network wherever we are with your story in mind. Even the news is an invaluable source of current market activity and acquisitional opportunities if you know how to watch it. Our staff are constantly (almost compulsively) gathering intelligence and resources they can bring to bear on your situation. This pays off when you have a big funnel to fill.

In short, our approach to filling The Big Funnel is rigorous—we work every angle as hard as we can to populate that first list with stellar prospects—and broad—we cast our nets wide to find the best answer to the question “What are you looking for?” wherever it might be hiding.

The first time we present you with the contents of The Big Funnel is your first tangible glimpse of where the entire process is headed. It’s exciting. Your acquisition, still unidentified, starts to feel real.

It’s the quality of the collection of names that go into The Big Funnel that counts. If you pour gravel into the top of a funnel, you won’t get gold out of the bottom. This is a moment where the quality of your Advisory Team becomes evident. Yes, a list of 150 names is too long to engage with in any meaningful, granular way, but that list still needs to be full of gold.

A final caution: anyone can learn how to do a good Google search for a cursory market survey. Even some M&A Firms rely on it as a resource. The problem with this tactic makes itself apparent fairly quickly… everyone else is doing it, too. Any excellent prospect you find via a search engine will be difficult to buy. Everyone else is buying it too.

So ally yourself with a team of Advisors who know better ways to search the market; they’ll find the gold everyone else is missing. Stillwater builds hard-working teams, highly skilled at navigating the murkiest waters of the marketplace. Bring us on board, and you’ll see the edge that gives us at every step of the acquisition process. Start the conversation with us here.

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Written by: Douglas Nix