Why Wait for a Deal to Post on a Marketplace?
March 24, 2023
There is nothing wrong with "on market" deals. But most ‘good’ deals represented by intermediaries do not get mass marketed.
The last few years seem to have been all about the online ‘Deal Marketplace”. In fact, based on our latest research, there are nearly 100 of them available in our industry.
The convenience of sourcing and prescreening acquisition opportunities has attracted all sorts of buyers to these various platforms.
While online deal marketplaces are an obvious way to find low hanging deals, the model has some significant drawbacks that buyers need to fully understand before building out a holistic origination strategy.
Let's take a look ...
Online deal marketplaces are:
- Easily accessible.
- Often low cost - although some now participate in success fees similar to a traditional buyside engagement model.
- Offer communication efficiencies with intermediaries.
- Only on-market, intermediary represented deals.
- You see what everyone else sees.
- As listing volume increases, so does your competition for deals
- No access to off market deals
What buyers really need ...
1. Access to both on and off market deals.
2. Ownership of ALL their lead flow.
3. No requirement to pay a success fee ever.
4. Support from experts who have a track record of managing and improving scaled sourcing efforts.
5. Access to both on and off market deal flow
Regardless of how buyers address these needs it is important to understand why sourcing exclusively from deal marketplaces is a less than ideal strategy.
There is nothing wrong with "on market" deals.
First, let’s state the obvious, there is nothing wrong with on market deals. These sellers have representation and are committed to sell. However, it is worth noting that these companies typically are valued more highly than off market deals due to the efficiencies of these markets.
It is also important to note that deal market places do not just aggregate on market deals, they are home to the deals being marketed the most aggressively. How often have you found the same opportunity on 2, 3 or more market places?
But most ‘good’ deals represented by intermediaries do not get mass marketed.
With more than 13,500 business sales intermediaries in the U.S. we must also consider that most ‘good’ deals represented by intermediaries do not get mass marketed. Instead, the banker or broker introduces the opportunity to select well fitting buyers in a more traditional auction setting. This means, even though the deal has representation, you still might never see it included in any online marketplace.
In short, on market deals often carry a price premium and still do not represent the entirety of the intermediary represented opportunity pool.
Competitive buyers must consistently access both on and off market deals. While there are many strategies to address this need, we feel CAPTARGET offers a ‘best of both worlds’ solution to allow a buyer of any size to access the needed deal flow with a scaled effort without ever paying success fees or sharing deals with competing buyers.
CAPTARGET will keep you in contact with 13,500 intermediaries.
Rather than waiting for an intermediary to post a deal to your marketplace of choice, our team periodically contacts more than 13,500 intermediaries on your behalf to ensure that they share any deals that meet your criteria regardless of where or how they are otherwise marketed.
Over time, these intermediaries build relationships with our clients creating a broader, passive on market pipeline that can pay dividends long term.
In conjunction with outreach to intermediaries, we conduct off market searches to client specifications. Since our team conducts outreach as a member of your team, and the lead flow goes directly to your team’s dedicated inbox, you own any and all opportunities responding to our outreach. This ensures you have access AND ownership to truly proprietary deal flow, all while an expert team manages the prospect list building, content strategies, systems needed to send communications at scale and reporting.
At CAPTARGET, we've borrowed best practices from the top buyers in the business over the past decade-plus. Because our work for you is tied to a competitive, fixed monthly cost, our typical client will save hundreds of thousands in dollars in fees acquiring companies. All while simultaneously building pipelines and relationships that can create long term opportunities for you and your firm.