What Does A Buyer List Contain?

1. List of Potential Buyers
2. Buyer Facts:
   1. Type of Buyer (Strategic, Family Office, PE Firm, Search Fund)
   2. Latest Fund Size
   3. Dry Powder
   4. Parent Company
3. Acquisition Preferences:
   1. Target Revenue
   2. Target EBITDA
   3. Target Check Size
   4. Target Acquisition Size
   5. Control Preferences
   6. Geographic Focuses
   7. Industry Expertise
4. Relevant Acquisitions:
   1. Acquired Company description
   2. Acquisition Date
5. Relevant Decision Maker:
   1. Contact Info
   2. Biography
   3. Board representation

What Can a Selling Company’s Founder/Board Do Themselves?

As a founder myself, if I were to put myself in the shoes of a founder selling his/her company, here’s how I’d proceed:

1. Access Financial Databases: I would figure out pricing and subscription costs to get the top potential buyers on Pitchbook, Crunchbase, or CapitalIQ. Generally, you’ll need access to more than one of these platforms as there are usually some gaps in coverage for each of these (and data is not always 100% accurate). They can range from $1,000 per license per year all the way up to $20,000 per license per year.
2. Build a Google Spreadsheet: Once you’re on these platforms, you’re going to want to find two cohorts of buyers: (1) strategic buyers and (2) financial buyers. some text
   1. Strategic buyers are companies that create actual products or deliver services while financial buyers are asset managers that buy and sell companies. For strategic acquirers, you’ll want to find your largest competitors that are acquiring similar companies to you in your space. You should also consider companies that are your suppliers or end customers that may also be interested in vertically integrating. 
   2. Financial buyers are usually PE firms or other large financial institutions. To find financial buyers, you should filter investors in the financial databases that invest in companies that fit your company’s profile. For example, if your company is worth $100 million but a PE firm only buys companies north of $1 billion, don’t bother putting them on your list. Some databases like Pitchbook have this level of detail on buyers while most are lacking. 
3. Populate Buyer Lead Details. Go to each buyer’s website and add their investment preferences to your google spreadsheet.
4. Populate Relevant Acquisition History. Look through their portfolio companies or press releases to see what acquisitions they’ve made to figure out if they truly have interest and expertise in your domain. 
5. Remove Potential Conflicts: There may be certain strategic investors or financial buyers that own your competitors that you don’t want to tell that you’re selling. You may be fine telling them you’re selling but may not want to send them any company secrets such as detailed financial data.
6. Source the Decision Maker. Look through press releases or a company’s team page to see which senior investors or corporate development folks have made acquisitions or are on boards of companies similar to yours.
7. Access Contact Databases. While you may know the decision makers’ title and name, you may not have access to their email or phone number. As such, you’ll generally need to pay for a tool like Zoominfo, Apollo.io, Seamless AI or Clay.

If you go through these steps, you should have quite a long list of potential buyers to contact to see if they’d like to provide an attractive offer for your business!

Why do you need an investment bank then?

Time-Consuming Work

Collecting that much info about hundreds of potential buyers takes days of manually grinding through lots of websites, press releases, and databases.

Proprietary Information

Because investment bankers spend all day working on selling businesses, they tend to have insights that are not publicly available. Here are some ways they can add detail:

1. If the buyer has limited dry powder and cannot invest due to timing or limited capital left to deploy
2. They may know that the buyer is only looking to get private company data and a free peek but not actually interested in the space because they never bid on similar assets
3. Bankers may know which have horrible reputations towards their portfolio companies
4. Do they have limited value-adds outside money? If you need partners with relationships to open doors in your industry, you may not want generic investors
5. Who has already bid on similar companies recently?
6. They have a good understanding of which buyers are aggressive in large auction processes versus those that shine during limited access auctions
7. They have existing relationships with the proper decision makers and know their contact information when it’s not publicly available

Lower Upfront Costs

Bankers charge high success fees only if your company is sold but otherwise are generally free or set low retainer fees. If you can use them and not have to pay for the license fees of the aforementioned databases, then you can limit your upfront spending and align your cash inflows from the sale with outflows of transaction costs.

Is There Another Way?

Our company, Scend, can generate the buyer list you’re looking for without you needing to pay for all these databases. Because we already have several proprietary databases, web scraping tools, and leverage LLMs to populate your potential buyer lists, we’re able to do the work that you or any investment bank can do, much faster and with sourced, accurate data. If you’re interested in learning more, please click here to see if we can help you build your M&A buyer lists with our AI investment bankers.

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