2.0.14- LOOKING FOR DEALS

LOOKING FOR DEALS

Now that you've established your screening criteria, you can start to hunt for deals. For buyers of all categories, it is good to look at as many companies as possible before you make a purchase. Of course, some large companies -- such as Cisco -- have full-time M&A teams constantly on the prowl for buyout opportunities. But this is likely not practical for entrepreneurial buyers and small to midsize companies.

Even corporations with their own M&A teams employ some combination of the following methods to find prospective buyout opportunities:

Professional help. This includes brokers and investment bankers. Such professionals can be expensive, but they're often worth it. In fact, this is the most common way to find acquisition targets. But, as you learned in chapter 1, a broker traditionally represents the seller, not the buyer. So if you use a broker to help find deals or craft a screening criteria list, make sure your contract specifies that the broker represents your interests at all times.

Network of contacts. Try every possible way to network with industry professionals, such as attorneys, CPAs, management consultants, and investment bankers.

Information sources. There is an incredible amount of information for buyers to use to locate buyout candidates. Examples include the following:

• Databases. Top electronic databases includeLexis-Nexus, Bloomberg, Dialog, InfoTrac, One-Source, Securities Data, Predicasts, Hoover's, and Dun & Bradstreet.
• Trade publications. Leading trade publishers include Penton (Restaurant Hospitality, Gases & Welding Distributor, Energy & Environmental Management, Material Handling Business) and Primemedia (Soybean Digest, American Printer, Concrete Products, Shopping Center World, Refrigerated Transporter).
• Customers. If your customers want a new product, perhaps this is an opportunity to buy the company offering the product.
• Web site. If you have a site, include the name of the contact for prospective sellers. Also, you could describe your criteria and what type of initial information you are looking for (revenues, profits, industry, and so on).
• Incentives. There should be a reward for any employee in your organization who brings a good deal to you. Perhaps you can set up a companywide referral fee program.
• Public speaking. Buyout prospects will likely attend conferences and association events. In addition to attending such events, you can also sponsor them. This may also lead to a speaking opportunity.