Strategic Buyer Origination Case Study

Malik Hayes

A strategic buyer came to CAPTARGET for support in sourcing 1-2 new acquisitions for their coming 12 month period.

The Client

Strategic investor looking for 1-2 deals max per year.

The Catalyst

Knowing that previous efforts at the company to source deals were sporadic, the client called us. With a need to grow their market share - and a lack of internal resources to initiate serious conversations with enough potential targets - the buyer was in need. Their small team felt they could not do it themselves.

Considered Solutions

  • Dedicate an internal person’s full-time efforts to origination, a role he had not previously performed.
  • Retain one or more buy side firms to do the heavy lifting, knowing that the success fee implications would be in the hundreds of thousands of dollars range.
  • Outsource the prospecting, outreach, and vetting to CAPTARGET.

Adopted Solution

Unsure of how to maintain focus on company operations while also sourcing deals, the firm was reluctant to dedicate one MD to origination full time. They felt that even given the needed hours in the day, they lacked the tools, and strategy to truly scale the effort long term. Additionally, the group was not able to reconcile a success fee-based model to their current strategy and resources.

The group started working with CAPTARGET on a monthly commitment basis.  CAPTARGET executed a search strategy that incorporated both direct outreach and working with on-market intermediary represented deals, carrying a cost of less than $3,000 per month with no obligation to pay any success or other finders fees.

Net Impact

The firm has been introduced to more than 16 qualified conversations with potential acquisitions. 2 Letters of Intent (LOI's) have been submitted. The opportunity was sourced and closed for a total lifetime service cost of just $36,000 (with zero finder fees or success fee participation). The buyer is confident they will close 1-2 deals before year end, and satisfy their growth via acquisition targets for the next year.  

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