Deal Sourcing Exclusive to Portfolio Add-Ons

Alex Karlsen

The challenge of growing via acquisition is different for professionals sitting at the portfolio company level than at the fund or parent investment level.

Portfolio companies are often spending money from their own corporate coffers, rather than spending investor capital.  Additionally they are often tasked with managing much of the process in house, typically relying less on investment bankers along the way, primarily to mitigate cost.  

Our model has two major differences that address the unique needs of private equity backed portfolio companies looking to grow through acquisition:

1. Flat-rate pricing. We never charge success or finders fees.
2. Direct outreach on your behalf.  We do not contact prospects as a third party and we do not get involved in the transaction.

Here’s how it works.

We are not a buy-side firm.
Buy-side firms typically work for a success fee which is much greater than our low monthly service cost. The average deal closed from a Captarget campaign saves $250K or more in success fees that would typically be paid to a banker for introducing the two parties..

Direct outreach to targeted sellers / business owners is done on your behalf.
With each origination campaign, our team is working on your behalf to generate prospects, create messaging and initiate contact with business owners. The initial solicitation on our messages looks and feels like it comes from your internal team.  We accomplish this by using an email alias at your company domain.  This allows for the perception that no third party is involved, and creates a more ‘top to top’ conversation from the onset of the conversation.

Potential sellers show the best response to this style of communication.
Our data on origination campaigns spans nearly a decade. The numbers don’t lie. Business owners are nearly immune to messaging from professional intermediaries at this stage of our economic cycle.  Portfolio companies have a unique advantage in contacting potential sellers - relevancy - and we help you leverage it. You speak to company owners who are interested in your firm specifically, not a general solicitation to sell.

You retain the rights for approval on any prospect lists we generate, and your list information is unique.  
We never sell, we just gather information per the scope of your campaign.  Having what amounts to a white-labeled origination service working on your behalf means we do not warehouse deals or shop them to third parties. The contacts and opportunities are yours and yours alone.

While these differences in approach may seem modest, they are often significant enough to materially impact the success of an origination campaign measurably.  

If your company has been chartered by a private equity owner to grow through acquisition, knowing these slight differences in need and the strategies to address them will improve your chances of identifying high quality acquisition targets.

Stay up to date with our best practices in deal origination and more with CAPTARGET insights.

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