Chapter 24The Inside View from an Outbound Reach Out
Depending on how strong your relationship is with the outbound recipient, the way it is handled would in turn be dramatically different. Let's rank them from the strongest to the weakest once again. The key assumption here is that you either already know the recipients personally, or you can be introduced by someone who has a strong relationship with the recipients. Sending out cold emails does not work for M&As, this is different compared to any other type of sales as M&As require a much higher standard of trust and are built on prior relationships. Cold email outreach implies desperation and would never yield an outcome that's acceptable.
1. Direct Personal Contact
Due to the fact that M&As are built on prior relationships, how seriously your contact pushes your inquiry forward within their organization would be a function of how high she ranks within the acquiring company and how strong your relationship is with her. Nevertheless, because this is an outbound inquiry, unless you have leverage via an existing actionable offer, the likelihood of this conversation turning into a M&A offer is miniscule. Moreover, if your contact is not in a product or engineering leadership position (director or above in publicly traded companies) with strategic influence, it's better to resort to an intro through your investor or board to someone with that decision power. When the outreach email lands on her desk, if this M&A is actionable for her own organization or team, then it's most likely to lead to more conversations and can become fruitful. If not, the best your contact can do is to forward your email to other product organizations or the corporate development department who serves as a catch-all for these types of inquiries, and at that point, there is little chance that this could become actionable. Hence, it is absolutely critical to ensure that the person you are reaching out to is already in a product or engineering leadership role where this opportunity is actionable for her own organization, so it's best to do your homework early on to identify and build such relationships early on before activating these conversations.
2. Intro to Senior Executive
Just like in the previous case, the onus is on you to first identify the right company with strategic alignment, and then find the right senior officers or executives with strong connections to your board or investors that would be open to an initial meeting. Do not expect your board members to do all the work for you when it comes to identifying the target company and the right contact. At a minimum, you need to figure out exactly who the key contact is, study her LinkedIn mutual connections, and if your board members are not connected, prune the connection list to see if their partners or associates are connected. Next, provide the blurb about the company and why an initial discovery meeting is warranted, and then check-in with your board member and ask if she would be comfortable in making an introduction. This is absolutely critical as your board member will not have as much context about your business or the angle you want to approach the key contact, and very likely if you delegate this completely over to her, she might be busy and not do it in a timely fashion, or identify the wrong person or approach with a weak angle that would jeopardize any potential M&A with this target company. So, at a minimum, do the work. Now if the introduction is strong and the senior executive has the right fit with your company, you will get a first meeting.
3. Intro to Corporate Dev
Corporate Developers' job is to meet and identify potential interesting acquisition targets and serve as the gatekeeper initially and lubricant in latter stages when it comes to a merger and acquisition. However, they work for their business units and typically do not take on meetings unless they are directed by their BU leads on doing discovery for a certain company or space. When you reach out directly or through an introduction to a corporate developer, depending on how keen she is, she could do a first read of your material and do some research and make a determination on whether there is a potential fit or not. If she thinks the opportunity could be interesting, then she would forward the intro material to her respective BU leads, and solicit for feedback. In the rare case that a particular BU is interested in learning further, the corp dev would schedule the first meeting and serve as the initial phone screen for an interview. Now this type of reachout is typically the least effective because corp devs see these types of M&A solicitations all the time, some from founders directly, some from personal connections, and a lot of times from bankers. Just like the HR of a company that is hiring, except in this case there are no explicit job postings, the probability is close to zero for a potential match when it comes to sellers approaching buyers. Hence, as explained in earlier chapters, M&As are a buyers market, companies are bought, never sold.