As a private equity-backed executive, originating a prospective acquisition target presents an opportunity to drive value. However, the CXO’s work is not done once the target company has been identified.
Unlike PE-backed companies with an exit timeline already in mind, or corporate divestitures that are motivated purely by financials, proprietary deals often involve founder-led companies, or other smaller companies where the owner and leadership team have a personal tie to the business. This means that in order to secure the deal, cultivation of emotional buy-in is absolutely crucial. CXOs can be instrumental in establishing this buy-in during proprietary dealmaking.
Building Trust with Sellers
Developing trust is key to differentiating your offer and making a case for why the current business owner should sell now, and sell to your company and firm. Taking the time to develop rapport with the seller could mean the difference between a successful acquisition and a failed deal. Executives can play a key role in solidifying these relationships.
“Smart sponsors will rely on the operating executives to win the hearts of the target team and ‘sell’ them on the future working relationship, knowing that can be the difference in a competitive deal. To do that, the sponsor needs to have an operating team that they can trust, where the plays are planned openly and communication is transparent in both directions. Building that trust and plan of attack between sponsor and operating executive is critical to the dealmaking process.”
— Josh Bouk, current PE-backed President and CRO
Aligning on an Acquisition Plan
Aligning beforehand is essential to alleviating seller concerns while adhering to the sponsor’s acquisition strategy. Savvy sellers wh...