"How Can Buyers Be Better?" Survey Results
August 4, 2020
With a potential universe of 10,000 private equity firms out there, it's important for buyers to take into consideration how they could improve their chances of landing a deal.
At CAPTARGET, we work closely with professionals on "both sides of the table."
There's often a disconnect between what private equity buyers and M&A professionals expect in dealing with one another. Since we see this every day, we wanted to survey the sell-side and ask a simple question:
"How can buyers be better?"
With a potential universe of 10,000 private equity firms out there, it's important for buyers to take into consideration how they could improve their chances of landing a deal. While firm reputation, relationships and strong tooling (from services like CAPTARGET) can help increase deal flow and closes, there's still more that can be done.
The response from our sell-side network was fantastic. Here is a look at the most often referenced points of improvement that buyers could address.
1. Buyers should explain their strategy up front.
How does the potential acquisition at hand fit into the broader firm or portfolio strategy? If acquired, will the company be part of a platform or roll-up in any way? Sell-side professionals can better serve buyers when they understand the bigger picture. Don't look at deals or one-off phone calls as transactional. Build a mutual relationship to remain top-of-mind for future deal flow.
2. Strong, professional buyers should outline their financing and deal structure preferences up front.
Sell-side professionals know that the chances that most buyer conversations do not lead to a closed transaction. Tire-kickers aside, it's simply hard to get a deal done. Buyers should be ready to disclose their source of funds and plans for structuring a deal up front.
3. Communicate consistently, and personally.
It’s not easy, but buyers are well-served to communicate on a consistent basis with intermediaries in order to stay top-of-mind. With thousands of buyers and sellers working both sides of the market, frequent and personal communication goes a long way. The average respondent said quarterly communication was sufficient to keep a relationship alive, even if it is as simple as a “check in” conversation to discuss recent deals and developments.
4. Your brand and website matter, a lot.
With thousands of other PE buyers in the marketplace, a buyer's brand and web presence matter. Stick out from the crowd and make these a clearly defined competitive differentiator. M&A pros want to understand what makes one buyer a better fit for their deal versus another.
From both sides of the table, what are your thoughts? We’d love to hear more from the industry on what buyers and sellers could both do to improve the process of getting deals done.
Don’t forget that services like CAPTARGET help buyers stay in front of intermediaries in a "done for you" manner to save time and money. Review our Deal Origination services here.