Should an M&A Outreach be Done by the Client or by Outside Professionals?
Very often a client has identified 7 to 10 potential companies that they wish to reach out to for prospective acquisitions. Usually they are competitors or companies that a vendor has identified as possibly being up for sale. I tell my clients that they are much better off having an independent third party do the Outreach Program for them. Competitors are very uneasy about sharing information and usually do not want their competition to know that they might consider a sale. The independent can ascertain whether a company would consider an acquisition without identifying the client. A Non-Disclosure Agreement can be put in place that very often mitigates the prospects concerns. After this has been accomplished, the third party has usually developed a relationship with the candidate, who then is more likely to open up.
In addition, I strongly recommend that the client not limit the Outreach Program to just the 7 or 10 they have identified. They should work with the independent to develop a profile and then have the independent review their data base to determine who else might fit the client’s needs. The odds for success are much greater as you increase the number of potential candidates.
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