How to Find the Perfect Acquisition Target
Our company is looking to expand through acquisition. I am uncomfortable using a business broker and wonder what other options are available to us. We have very specific requirements as to the size and geographic service area of the company we would be interested in purchasing. We have sent out introductory letters to several companies and followed up with phone calls but have not had any positive responses. Any suggestions would be appreciated.
—David Cornelius, CEO, CSSI, Lewisburg, Pennsylvania
Making an acquisition is a lot like landing a new customer. You first have to locate the good prospects, and then you have to be persistent in pursuing a deal. When I spoke to Dave Cornelius, it quickly became clear that he had done a good job of identifying about a dozen prospects for acquisition. He also has everything he needs to identify as many more as he wishes to, including comprehensive lists of other companies that, like his, are resellers of certain types of software and hardware. In addition, he and his people attend reseller conferences and seminars and know service representatives who are in constant contact with resellers. So he could easily put out the word of his interest in doing an acquisition. "With all those resources, why would you even consider going to a broker?" I asked.
I did think, however, that he had given up too easily on the prospects he'd targeted. "You wouldn't expect to close a sale after a letter and a follow-up call, would you?" I said. "You need to send another letter and then stop by each prospect for a visit. I'm not talking about pressuring anybody. Take people to lunch. Build relationships. Treat them exactly as you'd treat a prospective customer. Sooner or later, everybody sells. When the time comes, most owners have no idea whom to call. You want to make sure they call you. You also want to generate buzz. They can help you do that by talking to other owners. Plus, there may be opportunities for collaboration or joint ventures. Keep an open mind, and stay in touch."
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