Lesson 2: Don’t look only for partners amongst the companies currently raising money
Tips:
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- The money raisers are already on lots of radars
- The boot strappers, self funders may welcome strategic partners
A CPG client of ours was looking at entering a new category and they were particularly enamored of one brand that had been getting a lot of attention from the investment community. As we looked at the space, we found a company that met all of the criteria that the client had set out for us. The difference was, it was a family owned business that hadn’t needed any outside investment to grow. When we reached out to the family they were initially surprised, but as we talked they realized that investment from the outside could help them accelerate their expansion plans and they were delighted to be introduced to our client. This meant more attractive terms for all parties.
So often your M&A or Corporate Development teams are responding to pitches from the financial companies that have a vested interest in getting you to participate in the deals they want to offer you—not necessarily the deals that are right for your strategy (see Lesson 1). We start with your strategy and your requirements and then look for all potential partners that could fulfill your brief. We look both at the obvious options including the companies actively looking for money but more importantly we look in unexpected locations, unmonitored and unmeasured channels, universities and business parks, around the world, and also where your competitors are sniffing around.
This gives you a broader range of options and keeps you and your strategy under the radar.