The Research Difference. And Why It Matters.
As a leading M&A boutique we pride ourselves in our approach and believe our research difference gives each unique client project the edge.
We receive 4 – 5 emails every week from investors looking to acquire a business. We rarely engage.
This week we received one message from a reputable ‘buy-side’ M&A firm. The company acts for buyers wishing to buy companies.
We work mainly ‘sell-side’ – which means we act for companies that wish to sell. Right now, we are acting for 6 companies wishing to sell.
The ‘buy-side’ M&A firm asked: ‘Could you share details of your latest client project. We might have buyers interested.’
Sounds interesting right? I mean, if we are in the business of selling, and they are in the business of buying, surely the right thing to do is to connect and match seller with a buyer and save us time, cost and effort?
Actually, no.
The key to understanding why not, is understanding the different types of buyer.
Putting our ‘reductionist’ hat on, there are two core types of buyer. The first is a strategic or trade buyer. These types of companies act to acquire companies that either complement or extend their current offer.
The second type of buyer is a financial buyer. This group is made up of a wide range of financial investors, from high-net-worth individuals, family offices, private equity and so on. Their motives vary – some are looking for ‘turnarounds’, some are looking to acquire and spin out a few years later, some are looking to buy and hold etc.
Generally (and we do mean generally – i.e. there are exceptions to the rule), an SME looking to sell will usually find more attractive offers from strategic buyers.
I explained to the ‘buy-side’ M&A firm our research difference:
“We spend somewhere between 100 – 150-man days upfront on market research for each client. We focus almost exclusively on sourcing strategic buyers. But saying that we have 450 financial sponsors in our CRM (PE, VC, HNW, family office etc.) and we’ve a pretty good network in that space.
In terms of this specific project, we are a couple of weeks into the launch with a targeted 175 ‘strategic’ companies from 27 different countries.
I think with that in mind, we’ll follow through to see where our outreach leads – we are usually pretty exhaustive and leave few stones unturned.”
Being candid, we are not sure how this compares to other reputable “sell-side” M&A firms – i.e. would they have this scale of research and outreach for every client project?
We’re sure most would claim they do. But we suspect the reality is more likely a reliance on their internal CRM for ‘known buyers’ together with using ‘back-door’ M&A platforms that are used for sharing sell-side projects.
The simple truth is that 150 man-days of intensive research is expensive.
BUT. If you are really committed to achieving the very best outcome for your client, nothing less will do. We call this the research difference.
PS. We can condense that 150 man-days into 4 weeks. That’s because we resource with up to 8 researchers as a research-blitz!
Want to know more? Book a confidential session now to hear how bespoke research, our “research difference“, could give your company sale the edge it deserves.
Tags: company sale, financial buyer, research, research difference, strategic buyer