Every day, professionals in M&A and acquisition strategy are facing the challenge of find opportunities to grow their companies. The goal is finding the best opportunity that meets multiple criteria (e.g., industry, geography, valuation) and bringing that opportunity into your company’s portfolio. In the next few tips, I will outline a framework for deal sourcing, which you can use as a starting point to develop your own deal sourcing strategy.
Your Deal Sourcing Strategy Should Include The Following Steps:
• Identify Your Criteria: Start by identifying the criteria that you must have in order to pursue a deal. In this step, you should consider all the factors that are important to your company from a financial perspective as well as from an operational perspective. Although identifying all of your criteria is not always easy, it is one of the most important steps in developing your strategy.
• Identify Your Account Managers: Identify the people who are responsible for seeking out opportunities that meet your criteria. Although almost everyone in your organization may know someone or be aware of an opportunity that may be available, determining who is actually responsible for identifying and pursuing these opportunities is critical. Be sure to identify all of the criteria that you expect each account manager to have knowledge of so that you can determine whether they have the appropriate skills to accomplish this task.
• Develop Your Network: One common mistake made by companies when it comes to deal sourcing is not having a robust enough network. The best way to develop your network is to build relationships with professionals in the M&A community. The goal of this process is to find people who can serve as resources for you when an opportunity presents itself.
• Create a Database: Developing a robust database for tracking opportunities that meet your criteria is critical. This includes identifying key pieces of information such as price ranges, industry trends, and the criteria that each opportunity meets.
• Develop Your Process: Finally, you must create a process for evaluating opportunities and deciding which ones will be pursued and which ones will be put on the back burner. This step may be the most difficult to develop, but it is critical to creating a sustainable strategy.
