Finding the right deals in M&A is hard. But what's even more challenging is finding targets that don't want to be found. Aside from perseverance, you need the right skills and approach to even talk to these people, as they are hiding in the first place. Sharing his proven techniques and experiences on how to hunt deals in M&A is Dustin Intihar, Director, M&A and Strategic Alliances at Lubrizol.
"At the end of the day, a deal is not going to get over the finish line if it's not win-win" - Dustin Intihar
According to Dustin, there are many private companies out there who don't want to be found. These are mostly the 3rd, 4th, or 5th generation family-owned businesses that initially have no interest in selling their business. Sometimes, the owner isn't even the one running the business.
They just like to stay at a distance which makes finding them even harder.
The first thing you need to do is find out who is the appropriate person you should start talking to. After you figure out who, finding their contact information is crucial. Dustin likes to bypass gatekeepers, so he does more work to ensure direct contact with the right person.
What Dustin likes to do is to start outside his network, as he figures out who is the person that can introduce him to the target company. Then he starts expanding outwards and looks into his professional network, past colleagues, or even Linkedin connections.
If that doesn't work, he will start using secondary online research tools such as social media, Capital IQ, Pitchbook, and any other online resource and start digging into the owners and the shareholders. You also might need to engage with consultants, find former employees, or even investment bankers.
But just because you found them doesn't mean they'll talk to you. You can do enough research from the beginning so you know what their interests are, what initiatives they stand behind, or what charities they are involved in. You need to make your approach personal, whether it's through cold email or a cold call. Especially when you are approaching an international deal, you need to be very aware of their culture, language, and time differences.
During your first call, avoid saying that you want to buy their company. Because the reality is, you don't know enough about the company for that to be true. Treat it like dating; it's a get-to-know-each-other phase, so practice active listening while letting them know what your organization does. This phase is crucial because this will determine if they will want to meet with you in person or not.
At Lubrizol, they look for leadership teams who will stay post-acquisition. This is why he never pushes hard if the target doesn't want to sell the company. He might offer minority deals or partnerships instead of cutting ties with the company. Keeping relationships good and open is essential as they might decide to sell in the future. However, if the target is open and willing to sell, he insists on that first meeting.
Dustin's advice to practitioners out there who are looking to improve their deal sourcing is to be more proactive than reactive. Engage with as many people as possible and let them know your interests. This is how you can increase your inbound deals and unlock proprietary deals along the way.