Finding a Business Acquisition By Creating a Deal Magnet

Finding a Business Acquisition By Creating a Deal Magnet

Recently a prospective client approached me for help with a business acquisition he hoped to make. The prospect had yet to identify a suitable opportunity but knew he wanted to acquire a manufacturing business. He spoke as well of forming a search partnership to make several additional acquisitions in the coming years.

I had the sense that the prospect would speak with many accountants, bankers, and other attorneys regarding his plan, hoping that one of them might drop a suitable business opportunity onto his plate.

Over the years and using my network, I have made numerous business people, clients, and others, wealthy by finding a business to buy or business model or investor or manager for them.

I told the prospect, however, not to rely on my network on the pure happenstance that an opportunity would present itself.

Instead, to build near-term and continued success in the acquisition space, I recommended that this individual plan and invest in developing and maintaining a comprehensive “deal magnet.”

What is a Deal Magnet?

A deal magnet is a network for identifying acquisition opportunities. It consists of many contacts who are strategically aligned into a singular resource for making deals.

A deal magnet once developed would have a flywheel and continued momentum and could reasonably be expected to generate a steady stream of acquisition opportunities, including some that had not been listed or shopped in any way.

The Three Steps in Developing a Deal Magnet

1.  Create a database of businesses intermediaries

The first step towards developing a deal magnet is to create a database of business intermediaries throughout the relevant geographic area and to reach out to all of them explaining what you are looking for and asking them to forward suitable opportunities.

It isn’t easy when you are new to the acquisitions space and have no track record to even see/get access to these listed/shopped deals. It would be important to thereafter follow up on a regular basis with all of these business intermediaries to stay top-of-mind with them.

2. Build relationships through frequent contact

Second, start a direct mail campaign by which you contact owners of targeted businesses directly, and regularly. Calling might also help. This is a numbers game but one that can pay very substantial dividends when opportunities that are not on the market are unearthed. These unlisted opportunities can be the very best and most valuable opportunities as there is no or very little competition for these businesses.

3. Contact other professionals

A third prong might be to contact other professionals, such as bankers, accountants, and attorneys, and ask them to share acquisition opportunities. As few attorneys may have ever put a deal together, this seems to me to be less likely to happen than the first two ideas and initiatives listed above.

Creating and managing a deal magnet represents a substantial investment of time and treasure. But if you are truly serious about buying a business, or buying multiple businesses over a period of years, this is the best way to go.

I have coached many entrepreneurs in the planning, development, and maintenance of “deal magnets” and seen this strategy work.

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Benjamin Calkins

Ben Calkins is a well-educated, top-rated, and highly experienced business law attorney.

Ben Calkins is an honors graduate of Harvard College and the University of Michigan Law School. After law school, he clerked for a Federal Judge before joining one of the World’s largest law firms, Squire, Sanders & Dempsey. Mr. Calkins has also worked at, and been a partner in, several of the most prominent “old style law firms” in the World.