How Do You Find the Right Acquisition Targets? Let’s Share Strategies
October 23, 2024
by a searcher from Maastricht University - School of Business and Economics in Fribourg, Switzerland
As a search funder, one of the most important yet challenging aspects of the journey is finding the right business to acquire. I’m currently navigating this process myself, and I thought it would be valuable to start a discussion here on strategies for identifying the best acquisition targets.
In my experience so far, I’ve found that having a clear target profile is essential. For me, that means focusing on businesses with stable cash flow, recurring revenue, and a solid history of profitability. I also look for industries that are either stable or showing signs of growth, where technological disruption and regulation aren’t major risks.
But beyond defining the right profile, the big challenge is sourcing these businesses. While online business marketplaces and brokers are useful, I’ve had more success with direct outreach and building industry networks. Many of the best opportunities aren’t publicly advertised, so I’ve been working on engaging owners who might not be actively selling but are open to a conversation.
Of course, finding a potential deal is only half the battle. I’ve learned that evaluating the business—from its operations and customer base to its scalability—is critical. A strong balance sheet is important, but so is understanding the growth potential and whether the business fits with my long-term vision.
Now, I’m really curious to hear from others in this community. How do you approach the process of finding acquisition targets? What methods have worked best for you, and what key factors do you prioritize when evaluating potential businesses?
Looking forward to learning from your experiences and insights!
in Jaipur, Rajasthan, India
This is something that we do for our clients as well where we want to generate leads for them for their services, often people are not ready to buy but constantly engaging with them helps.
Quick question: Do you have a team that helps you to do direct outreach and building those contacts or do you do it yourself?
from Western Michigan University in Grand Rapids, MI, USA
From there, it is similar to running a sales process. We need to go to where executives for companies that might be a fit are and start a conversation with them. This can be done through networking, social media, referrals, email, letters, cold calls, etc. Listing sites and relationships with intermediaries can also be solid resources for deal flow as well.