The Growing Importance of Business Development for Buy-Side M&A

Buy-Side M&A Project Manager, Sam Scharich, dives into the factors that result in a successful buy-side business development campaign.

Business Development is quickly becoming an essential part of the Mergers & Acquisitions process, particularly when it comes to serving private equity firms, family offices, and private investment groups. While growing competition can partially explain the increasing importance of business development, we can attribute some of this shift to how things have changed over the course of the pandemic: with the uncertain state of the economy, buyers are hungry and business owners are generally more nervous about whether it’s a good time to sell.

Whether it comes to a corporation looking for strategic acquisitions, a private equity group looking for platform or add-on acquisitions, or an individual buyer seeking to become a first-time business owner, the process of finding the right acquisition and executing the deal can become an all-consuming task. It’s expensive, and it’s incredibly time-consuming.

Through skilled business development specialists, this process can be significantly streamlined. In fact, this is quickly becoming a vital component of the Mergers & Acquisitions and Private Equity processes, and it’s more necessary than ever to have a buy-side intermediary to source new business relationships.

Sam Scharich, M&A Advisor and Director of Business Development at Calder Capital, LLC

According to our Director of Business Development Sam Scharich, there are three main phases of business development. 

The first component is a solid understanding of the client/buyer’s criteria

“It’s crucial that we have an incredibly comprehensive understanding of what our client is looking for,” says Scharich. “The very first step is to put on our client’s hat and dive deep into understanding exactly what a client is looking for, key considerations as to what isn’t a fit for them, and most importantly the why–what is their end goal/desired result? This allows us to craft our message to prospective sellers and through initial tests of potential prospects, ensure we are not wasting any time going in the wrong direction. ”

The more targeted the search, generally, the more successful.

The next phase of business development consists of conducting vast internal research. This process comes down to doing the “dirty work” that others are not willing to do. 

“We start by casting as wide a net as possible,” explains Scharich, “pulling lists from multiple databases, from Google, and doing everything we can to identify any companies that could be a potential fit for our client.” Once this step is finished, each company undergoes further in-depth research, in order to determine whether it fully qualifies for the client’s specific criteria. This list scrubbing process is extremely time intensive, but once complete, leaves the team with a substantial number of hand-picked companies that are ideal acquisition targets.

Scharich elaborates, “It is critical to note the importance of attention to detail. How often have you received an unsolicited email with your name spelled incorrectly, your company spelling incorrectly, or even addressed to the wrong person? The sender instantly loses credibility and their ‘one shot’ is now gone.” Calder makes certain to spend an appropriate amount of time to ensure that we have the right contact information and that the company itself is a good potential fit. Concluded Scharich, “It’s always baffled me how little time marketers are willing to spend on their leads. They download a list and hit send. If you just take 10 minutes per lead, your chances of a positive response skyrocket!”

Buy-Side Business Development experts do all the heavy lifting of finding the right acquisition, so the buyer doesn’t have to.

Once we have compiled those companies that are desirable to the client, we’re ready to move onto the final step: outreach.

We research CEO/Owner/President/High-level executive contact information, email and phone, and contact them professionally and confidentially through a 5-step outreach process. Since we do every step of the process in-house, we are able to uphold quality, professionalism and guarantee leads, all while portraying our client as the ideal buyer. Once a conversation is started with a prospect our team is quick to make a direct introduction to our client, via a conference/video call or site visit. Our team is then available to help a buyer throughout the rest of the process – valuation, analysis, information gathering, drafting of an LOI, due diligence, etc.

If we are unable to reach the prospect, or they respond that they are not interested, they are entered into a professional and customized loop drip campaign that keeps our client’s name in the forefront of their minds should they change their mind. 

Calder Capital’s business development process has evolved significantly since our founding, and these evolutions–a series of consistent improvements in processes, automation technologies, and efficiencies–have turned Calder into the prospecting machine it is today. For example, our team continues to work with a data analytics firm that has helped improve our email engagement (opens and clicks). By reviewing 100,000s of internal outreach data points we can now confidently craft the proper message to the optimal contact at the perfect time. We understand we are tasked with a huge responsibility of making the first impression for our clients and therefore everything from the language in the subject line to the email body content to our portrayal and background on our client is crucially important. As another example, our team now utilizes a superior dialing system, allowing team members to spend more time having meaningful conversations with prospects instead of dialing numbers or leaving voicemails. Finally, we are now leveraging our CRM much more efficiently and to our advantage to retain long-term warm leads for our clients.  

Gone are the days of paying a buy-side advisor upfront and hoping for results on the backend. Our client engagement structure ensures we are paid for delivering, and if we cannot meet our guaranteed leads for the month the subsequent month’s fee is waived. Although, this is rarely ever the case as there is an entire team working for each client and the communication between our team and the client is constant and informative. The process is incredibly transparent and honest. We’ve implemented a team approach to the buy-side process, with multiple advisors working directly with the client, and several skilled financial analysts working behind the scenes.

While implementing these changes weren’t a direct result of the pandemic, they’re certainly beneficial to the way the market has shifted in light of the COVID-19 uncertainty. The pandemic has left many potential sellers wondering if and when it’s a good time to sell. Consequently, more business owners are holding off on listing their business on the market, which has made our outreach even more effective.

Due to the pandemic, many business owners are holding off on listing their companies, which has made business development outreach much more effective.

“We have reason to expect that this will continue for a while yet,” Scharich remarks, “with many business owners reluctant to list their companies until we’re finally able to put the virus behind us. And regardless of the virus, there’s always a certain percentage of business owners who will never list their company due to confidentiality concerns or just the desire to avoid paying broker fees. These are all people who eagerly await a call like ours on behalf of a qualified buyer.”

In summation, working with a business development specialist is an absolutely crucial and necessary way for a buyer to receive proprietary off-market leads. Working with a buy-side advisor vastly increases the likelihood of a successful deal, not only from an identification and introduction standpoint, but also by assisting in negotiating, expectation-setting, and overall knowledge of the process and ability to help get the deal done.

Find out more about our risk-free buy-side process here.


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Calder Capital, LLC