Mergers and Acquisitions For Dummies (34 page)
Read Mergers and Acquisitions For Dummies Online
Authors: Bill Snow
Don't go into hyperbolic hyper-drive when making calls! Some people, especially beginners, tend to gin up their company and attempt to add a mega sense of urgency to the call. That just makes you sound like a snake oil salesman. Keep your pitch objective. State the facts without offering subjective opinions (such as “This is the greatest company! You better act fast!”).
Why you need to get to the point
As I cover in Chapter 3, M&A involves a generally accepted process that Buyer and Seller follow step by step. But that doesn't mean the process rockets in a straight path from start to finish. In reality, it can meander to and fro.
The reason is simple: People. People (even acquisitions-minded executives) have a lot of things going on in their minds. Yes, many Buyers are waiting to hear from potential sellers, but they're not literally staring at the phone for eight hours a day. They're probably not expecting your call at that exact moment, so their minds are elsewhere â on yesterday's missed putt, Junior's suspension from school, whatever.
When you get this person on the phone, get to the point. Give him the basics in an objective manner (see the nearby section “Phoning a PE firm” for more on this call). Providing more detail and color than necessary at this juncture simply reduces the odds that your phone buddy will be able to cut through the mental clutter in his brain and pick out the important facts of your rambling rant. Don't re-create history; your phone buddy doesn't need to hear a recantation about the invention of the Internet or how your specific industry developed. He needs to learn what he doesn't know: details about your company and the opportunity you're presenting.
After you establish the interest level of the potential Buyer, you can delve into detail and provide color, tell jokes, and you know, have a real conversation.
Navigating the phones when calling strategic Buyers
Finding the right person at a strategic firm can be a bit trickier than finding the right person at a PE firm (see the preceding section). After you find that person, your pitch is essentially the same as the one I lay out in the preceding section for contacting PE firm employees, so instead of reinventing the wheel, here I simply focus on getting to that right person at the strategic Buyer.
The first point to remember is that the larger the company, the more complex the process of simply finding the right person. This situation has something to do with the “the greater the number of people, the greater the chance you'll talk to someone who really doesn't care” theory. As a result, calling the general number on a company's Web site without knowing whom to talk to almost certainly gets you routed to a time-waster who can't help you. Check out the later section “Overcoming screener roadblocks” for help getting to the person you're contacting.
Search the company's Web site and/or use a fancy online research site if you have access to one (check out the appendix for some examples). You're looking for anyone with “corporate development” in their title. You can even do a general Web search by using the company name and “corporate development”; you may turn up someone quoted in a newspaper article or tagged as the author of a magazine column. If you can't find a corporate development person, go ahead and call the company's main number.
If you have to call the main number, don't ask for the CEO. CEOs make two or three decisions a year. Seriously. Now, those decisions are enormous and typically impact the direction of the entire company. But the CEO (the capable kind, that is) doesn't make a slew of small, nitty-gritty decisions. Those are for the CEO's lieutenants: VPs, directors, and all sort of sundry underlings. As far as acquisitions are concerned, the decisions the CEO makes are usually of the “go make acquisitions” variety.
Instead, ask for the office of the CFO. This line is great because you're not asking for the CFO. The CFO is a good bet, but depending on the size of the company, the CFO may fancy himself a quasi-CEO and therefore only make a handful of decisions each year. Most corporate phone-answerers are trained to be very careful about whom they route to those C-level executives. Every pesky Tom, Dick, and Harry salesperson in the world is calling up these people and asking them to get in on land deals or buy a hot penny stock, crap IT system, or insurance that no one really cares about.
Asking for the office of the CFO implies you aren't looking to speak to the CFO, which immediately becomes a point of relief for the person who answered the phone. Now, that person doesn't have to argue with you about how he's not allowed to connect you with the CFO.
After your call is being routed to the office of the CFO, you've got it made. Whether the CFO's assistant answers the phone or whether you get voice mail, you want to say the same thing:
Hi, my name is Bill Snow, and I represent a company that is for sale. I think your firm might have an interest. I'm hoping to have a quick chat with the person who handles the initial screening of mergers and acquisitions opportunities to see if this opportunity might be a right fit. Can you help me out?
Piece. Of. Cake. The secretary may ask a couple clarifying questions about your company (product/service, size of company, that sort of thing), but because you have a script or talking points, that's a breeze. Most likely he'll tell you whom you need to speak with and what that person's number (and perhaps e-mail) is and then connect you.
If a seemingly earnest person says she'll find the right person for you and forward him an e-mail for you, realize that this exchange will most likely result in nothing. Don't expect someone else to do your job. Make sure you get the name and contact info of the person you want to speak to. This anonymous stuff never works! As a second choice, send an e-mail to that person's secretary with explicit understanding the e-mail will be forwarded to a specific person (as I discuss later in the chapter).
Following a script that works
When you get the right person on the phone, you need to be prepared. I always have a script in front of me. It quickly covers the basics: what the company does, its clients, the revenues and profits, and what the company is seeking to do. No hyperbole. No bragging. No subjective statements. I get to the facts quickly and I leave it at that.
Here's the standard script that I use when starting a conversation or leaving a voice mail for someone:
[Individual's name], this is Bill Snow with [name of investment bank]. My number is 312-XXX-XXXX. I'm hoping to talk with you for a moment about a client of mine to explore whether this might be a suitable acquisition target for you.
My client is a highly profitable marketing services company. It provides lists, list management, and data-aggregation services for companies that market to medical/healthcare providers. Customers include medical publishers, pharmaceutical companies, medical equipment/device suppliers, healthcare recruiters, and more.
The company represents a great add-on opportunity for a marketing services firm (especially one with a medical/healthcare focus), a publishing firm, or a data analytics company.
The company has grown at about 18 percent per year since inception in 2001; '07 revenues were about $19 million with $3.4 million in EBITDA.
[If leaving a message] Please call me at your convenience to discuss further, 312-XXX-XXXX.
Don't worry if the grammar isn't perfect! You're not reading the script as is. You simply want the salient points in front of you for quick and easy reference because you can easily skip or omit an otherwise important fact during a conversation.
Another benefit of the script is that, uh, having those, er,, main points in front of you helps you, you know, uh, cut down on those nasty verbal, uhhhh, stumbles. Those unfortunate syllables come because you know you need to add something else, but you just can't remember what. Having a concise script helps you avoid using those crutch words.
Practice your script a few times before making a call. You want to focus on getting the gist of the message across, not rereading the whole thing verbatim. Don't read it exactly the same time and time again, either. That just makes your pitch sound canned, and you want to sound conversational. The script is just there to help cue your memory about what to talk about.
The script's abbreviated cousin is the talking point document. If you feel a full written script may make you sound too rehearsed, you may find simply having the salient points in front of you helpful.
Here's an example from my past:
$50 million manufacturer of food equipment