Expert Learnings | Data-Driven Deal Generation

This past fall WSC & Company hosted our 5th Annual Search Fund Conference where we connected with over 120 of our searchers, operators, LPs, and other members of the Search Fund Community to discuss best practices. One of our service provider partners, Nevin Raj the COO and founder of Grata shared his insights and learnings from his seat enabling data-driven outreach. Nevin brought his learnings to our searchers at the conference after speaking with over 500 M&A professionals this past year.

Learning 1: Diversify your Channels

From the over 500 discussions with M&A professionals, there was no clear consensus on the best channel for successfully closing leads. However, Email was the highest with ~38% preferring that channel, followed by phone calls with ~29%, and trailed by social media and direct mail with ~15% and ~4%, respectively.

Learning 2: Be Persistent

On average, it takes 8 touches to generate a qualified opportunity. The need to reach someone multiple times before they respond is an important contributor to why tech-enabled outreach is critical.

Learning 3: Pursue at the Right Time

Depending on your value proposition, different triggers may be more (or less) successful indicators of an owner who is looking to sell. Competitor M&A activity may be a good sign that the industry is consolidating and there are willing sellers; however, this dynamic may not be a good factor if the owners’ legacy is less important to your target. A long-tenured owner/CEO nearing retirement age with limited supporting bench strength is a great indicator that the business may be at a point in its lifecycle where it makes perfect sense for a transition to a searcher.

Learning 4: Don’t Send Generic Emails

Personalized emails deliver 6x response rates. That being said, personalization can mean a lot of things and it is on you to understand how to personalize at scale, or VaaRP (Volume at a Reasonable Personalization). It is easier to do this if you are leveraging technology or personalizing the information in your messaging that applies to you, your fund, or your interest in the space vs. company or target specific variables for every message. The difference in efficacy between high customization and low to moderate customization is not as significant as one might think.

Learning 5: Be Targeted, but Open to Adjacencies

Business owners may be hesitant to talk about their competitors or their business, but they love to discuss similar companies. Use opportunities where an owner is not interested to identify potential spots in the value chain that are equal, if not more attractive.

Learning 6: The CEO is not the Only Decision Maker

Winning deals often requires convincing more than just the seller or CEO. On average, there are ~3 stakeholders from the seller’s side included in meetings that lead to successful LOIs and closed deals. Try to get in the room with those individuals early on.

Learning 7: The Biggest Surprises can be the Best Deals

Leverage an edge in data, how you are reaching out to potential sellers, or using current hot investment thesis to identify new industries where PE or other consolidators aren’t playing, yet…