One of the most challenging aspects of “not-for-sale” deal making is that more often than not owners initially are not interested in selling. Owners say “no” all the time and it can be discouraging, especially to first-time buyers who are unfamiliar with the M&A process. Here are three steps a buyer should take after hearing a “no” from a seller:
1. Be persistent, but play nice
Just because someone says “no” at first, doesn’t mean you should give up. Usually, an owner says “no” simply because the idea has not crossed their mind. Of course, you must toe the line between being persistent and being annoying, but never be afraid to ask for a follow-up conversation. An owner is not going to sell their company over the phone, but if you can get them to agree to a first meeting or an initial conversation, you’ve already begun opening the door.
2. Be patient
An owner may not be ready to sell…yet. If you are a strategic, serial acquirer, you may find the prospect is a perfect company for you down the road when they are ready to sell. For example, some three or four years ago, we approached an owner in Asia on behalf of our client. At the time, he was focused on growing his company and not interested in selling. We left the conversation on good terms with the door open should his situation change. Just last week, he reached out to reignite the conversation around acquisitions. This happens more often than you would think, especially in niche markets where key players tend to know one another. Keep in mind that often a “no” means “not right now.”
3. Move on to plan b (or c, d, e or f….)
In some cases, despite your best efforts, the company is really not-for-sale. If this is the case, it’s perfectly acceptable to move on to the other prospects in your pipeline.
As a strategic acquirer, remember that in pursuing not-for-sale deals you may hear many “no’s” before you hear a “yes.” Don’t let this discourage you; it’s all part of the process of identifying the right company that is best suited to your acquisition strategy. With persistence, patience and a full pipeline of prospects, in the end, you will find the right deal.