Chapter 05

Finding and screening buyers

The search is where a mandate earns its keep. Publishing a listing reaches people who are already looking. Approaching a list reaches the ones who were not.

Three sources

• The platform. Registered buyers who have described what they are looking for and can be matched against the profile of the business.
• The direct approach. Companies for which this business would be an addition rather than a purchase, contacted individually and confidentially.
• The adjacent network. Suppliers, partners, competitors and former employees, approached with more caution because the relationship survives the process either way.

Screening before disclosure

A candidate is worth the memorandum once three things are established: that they can fund a transaction of this size, that they have a reason to want this specific business, and that they are able to decide without a long chain of approvals.

The check is not intrusive. A short conversation about what has been bought before, how the purchase would be funded and who else is involved in the decision filters out most of the traffic.

The cost of a long list

Every additional party who receives the memorandum increases the chance of a leak, and each one absorbs the seller's attention. Ten well-chosen candidates usually produce more competitive tension than fifty poorly chosen ones, because the ten are all capable of finishing.

Competition is useful, but it comes from candidates being real rather than numerous.

Keeping the process running

Candidates move at different speeds. A schedule with a date for questions, a date for indications and a date for a decision keeps the group roughly aligned and prevents the fastest party from setting terms while the others are still reading.

Where a candidate misses a step twice, the honest reading is usually that the interest was never firm.

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