Deal Origination in the Lower Middle Market.
M&A Markets

Deal Origination in the Lower Middle Market.

12th July 2022

Published Date: 12-July-2022

“Only about 20 percent to 30 percent of businesses that go to market end up selling” – Christopher Snider of the Exit Planning Institute (extract from Forbes)*

Traditional deal origination in the lower middle market involves research, cold calling, contact networks and little black books. The work of originating a deal is cumbersome and time consuming. Not surprisingly in this lengthy process the capacity to originate a deal is lauded and rewarded because from it flows fees and income for the M&A Advisory Firm. Indeed, evidencing the very capacity to find deals is a marketing pillar for M&A firms. However, this should not mask the inefficiencies in the process.

This manual process was born from a lack of alternatives, if you are engaged by your client to acquire a bolt-on which they cannot readily identify, you have the huge statistical problem of researching and identifying targets, often with little certainty on how they will respond to an approach. Every year M&A Teams expended huge amounts of time and effort in frequently futile investigation of possible targets; And yet statistics show us that there were plenty of opportunities out there, up to 80% of which never found a buyer.

It is just as difficult on the sell side, the need for secrecy to protect your client, engaging with multiple trade entities or funds to identify possible acquirers. The whole range of process issues that arise as you use the tools available to you to source an acquirer while trying to maintain confidentiality. Lots of team hours, lots of effort, lots of cost.

Negotiating a retainer or up-front fee will lessen the pain but will not deliver the level of fees or deal success that M&A firms need to grow and prosper.

Why in this tech driven age when you can pay for your lunch using your phone but there is so much old school methods around deal origination?

Tech lag is a term coined to describe the issues around the aging of software packages, or more specifically attitudes to updating these packages by consumers. It is the same with any office process or practice. Methods become ingrained, teams adapt to these processes, change is difficult even unwelcome especially if teams do not have time to think about and evaluate processes fully; at times we can all be busy fools.

The tech innovation sector reacts to perceived flaws in business processes as opportunities. These tech solutions must be developed, adapted and adopted before achieving widespread use.

The same is true for M&A origination, marketplaces, digital lists and sharing systems have all been tried in the search to provide an effective deal sharing system, mailshots were replaced by faxes which was replaced by emails which was replaced by online content. All of these were improvements, as tech evolved to provide better formats.

Now we have global formats, no longer just reliant on you finding the customer but instead enabling, the customer to find you.

M&A Markets provides the same for M&A deals. Anonymity, security, data quality, yet global accessibility is all now available for your deals at an annual cost which is probably less than a month’s salary for a researcher.

It is time to think more about ensuring that they can find you rather than struggling to find them.


M&A Markets
Deal Origination in the Lower Middle Market.

M & A Markets provides access to a marketplace that is unique to any other deal space.

"The work of originating a deal is cumbersome and time consuming."
– Tim Counihan twitter social icon Tweet

M & A Markets provides professional firms with anonymous access to a national and international network of advisors who specialise in buying and selling businesses on behalf of their clients above $1m.

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