After spending a few years in middle-market private equity and M&A, I've noticed something interesting: most firms are fighting over the same deals.
However, by asking the right questions, you can still find great acquisitions. The challenge isn't just finding deals – it's finding the right deals that you can actually win.
Let's break down three strategies that have consistently worked for me in finding and closing deals, even in highly competitive markets.
1. What deals hasn't everyone seen?
The most obvious opportunities are rarely the best ones. While everyone else is chasing after deals that are already on the market, there's significant value in pursuing opportunities that haven't been packaged up and shopped around yet.
Developing an Off-Market Strategy
Creating an off-market deal pipeline is like farming – it requires patience, consistent effort, and the right tools. You're essentially cultivating relationships with business owners who haven't yet decided to sell. This approach has unique challenges:
- You'll need to educate potential sellers about the entire process
- Many conversations will end without a deal
- The timeline from first contact to close is typically longer
- You'll need to handle a higher volume of initial conversations
Actionable Tip: To scale this approach effectively, focus on building these key elements:
- A strong brand that resonates with your target market
- A capable team to handle outreach and relationship building
- Systematic processes for tracking and nurturing relationships
- Clear educational materials about the selling process
2. How can I be the first see deals?
In the manufacturing space, I receive 5-10 deals every two weeks with EBITDA between $1-5 million. This isn't by accident – it's because I've positioned myself as a go-to person in this sector. When you're known for something specific, deals start finding you.
Building Your Industry Presence
To become the first person brokers and sellers think of, you need to:
- Develop deep expertise in a specific niche
- Regularly share insights and thought leadership
- Build relationships with key industry players
- Maintain consistent market presence
👉 Tip: Choose your niche carefully. Focus on an industry segment where you can:
- Leverage existing knowledge and connections
- Identify clear differentiation points
- Build meaningful relationships with decision-makers
- Demonstrate concrete value to potential sellers
3. How can I still win if everyone has seen it?
Just because a deal has been passed on doesn't automatically make it bad – it might just be wrong for most buyers. The key is developing specific capabilities that allow you to succeed where others can't.
Finding Your Edge
In my case, I look for businesses with specific characteristics that might scare away other buyers but play to my strengths:
- Lower than market GP/employee ratios
- Underutilized assets
- Poor inventory management
- Weak B2B sales processes
You need to Identify (or develop) your unique advantages:
- List specific problems you're exceptionally good at solving
- Document past successes in similar situations
- Build a network of experts who can support your improvement strategies
- Create a clear playbook for post-acquisition improvements
For example, when I see a business with poor profitability but strong revenue and good assets, I get excited. Why? Because I know how to optimize operations and improve B2B sales processes. I've built a B2B distributor to 25% net margins, so I know the levers to pull.
Know Your Limitations
Just as important as knowing your strengths is understanding what you shouldn't tackle. For me, that means avoiding:
- Businesses heavily dependent on highly skilled labor
- Operations with high workforce turnover
- Situations requiring expertise I don't possess
👉 Tip: Create a "No Deal" checklist:
- List specific characteristics that don't align with your expertise
- Document past challenges you've faced
- Identify areas where you lack competitive advantage
- Be honest about resources you don't have
The path to successful M&A isn't about seeing every deal – it's about seeing the right deals for you. Focus on developing these three core strategies:
- Build a robust off-market deal sourcing system
- Establish yourself as the go-to expert in your chosen niche
- Develop specific capabilities that give you an edge on certain types of deals
Remember, <span id="yellow-highlight" class="rte-highlight" style="background-color: yellow;" fs-test-element="highlight">success in M&A isn't about competing with everyone else – it's about finding your own game to play</span>.
