How to Cultivate Relationships with Deal Targets
Fostering Relationships with the targets
You can’t invest infinite effort in building relationships with every player in the market. You have to get fairly specific and know the top 10 to 15 companies that are your most likely targets where it's worth the investment to build the relationship. The earlier you form a relationship, the further back you want to go, the better for the deal.
The benefit also goes both ways. The seller will see how you treat employees, what will you do to their business, trust is a very important issue when it comes to selling your business to someone else.
“Relationships with potential targets drives everything from better diligence, better integration, easier negotiations, to a higher likelihood of getting the deal done.” - Michael Frankel
There are 3 biggest mistakes when cultivating a relationship with a seller:
- Building relationships with non-decision makers. It’s an enormous waste of time.
- Showing off too much during the dating process. If you pissed the target off, you are never going to get that deal done.
- Falling in love. This gives you blinders and tunnel vision that you will not be able to see if another competitor has eclipsed them in the market. The worst is when you self perpetuate the idea that they must be the right target because you've invested so much time with them.