Sorry! Wrong number!

We've got 17 Search Funds currently under contract. (A little bragging on Friday never hurt anyone! ;-) ) Most are traditional Search Funds, and some are self-funded. We've talked to hundreds of ambitious people looking to break into the market by acquiring a business through the Search Fund model. Almost all of them have some experience searching on their own. Today, I want to share my insights from these conversations.

As I mentioned in a previous post, based on Stanford University's annual stats, few Search Funds actually close a deal. There are many reasons for this, but a major one is the lack of high-quality targets.

I think a lot of people are making this too easy on themselves. I often hear about AI-powered email funnels that automatically (and supposedly highly personalized - I'm not so sure) reach out to targets. The most extreme case I've seen was someone who had implemented an 11-step follow-up sequence. The response rate? Between 1% and 2%. And remember, a response doesn't mean they're interested. A simple "no" is a response too.

Searching is hard work. It's a full-time job. To be successful, you need to thoroughly vet potential targets and have a growth strategy in mind before you even reach out. That's the only way to truly personalize your outreach.

No wonder so many searchers rely on on-market deals. Sifting through lists from sell-side brokers is much easier. But are they the best deals? We here at eightM don't think so. The best deals often emerge when a strong relationship is built with the target early on. It's a long process, but it's sustainable.

By the way, in certain industries, email outreach might not be the best approach. Sometimes, a good old-fashioned letter can make a big impression. Nice stationery, handwritten signature - it still works... well, unless you're looking for a software company. That might not be the most effective tactic. ;-)

Question? Ask (to build trust)!

One of our largest customer segments here in the US is small private equity firms. We can offer our team's expertise to provide significant value, especially to these companies.

Typically, it's the junior analysts at these smaller PE firms who initially reach out to potential targets. However, they're often the ones who also conduct the first call to pre-qualify the target. In these early conversations, there's often a lack of finesse when dealing with the target, who is typically a seasoned entrepreneur. It's common for these calls to focus solely on financials. But the entrepreneur would usually prefer to discuss future strategy and how their business model can be integrated into a growth path.

So, the key to a successful first conversation is to build trust and rapport by showing genuine interest in the business model and the entrepreneur's accomplishments. Finances can come later. It's as certain as death and taxes.

Happy Friday y'all...

Your Andre Achtermeier

[email protected]