Blog Image - Asking for help
The quest to become an entrepreneur by purchasing a business is about learning and continuous improvement. No search is the same, nor is any searcher, therefore you have to seek out solutions to the challenges you face along the way, apply them to your own search process and rigorously improve them until you finally close on a business.

Learning from others is critical to this endeavor. However, the “search” field is so unique and limited in size that there are very few experts to guide you and offer advice along the way. Investment bankers, private equity experts, investors and SME owners themselves just find it very hard to relate to your journey. It is critical therefore to develop a peer group of other searchers to both accelerate your learning and provide vital support for your journey.

Reluctance by searchers to share

Early on in the process, searchers seem reluctant to share information and reach out to other searchers. Andrew Mondi of Lyndhurst Capital reflects “I did not prioritize corresponding with other searchers for the first 6 months of my search. I didn’t understand the value of it…I wish I had.”

After making the decision to acquire a company, the increased feelings of autonomy and independence seems to get in the way for many searchers from reaching out and asking others for help. Launching the search is fraught with a myriad of decisions and you may just want to get started and don’t have the time to seek assistance. It may also feel like diminishing your “uniqueness” to take advantage of what another searcher, a year ahead of you may have agonized for weeks over.

These days, one of the principles of “lean” thinking is the concept of benchmarking, which legitimizes this “borrowing” of best practices. After all, it is not the idea that is critical, but how to execute it that determines a successful outcome.

More frequently, searchers feel that they will be competing with each other over the same “owners” and develop FOMO. In practice, however, there are very few reported cases of multiple searchers bidding on the same business and in some instances sellers may simply mis-report that “another searcher is looking at me”.

Creating and nurturing a variety of support searchers

Before one decides to follow this arduous path they will likely have spoken to 30-50 searchers who are in various stages of their own search process. Pick no more than six from this group, and recruit them into your peer group. This group can form the basis for establishing a long term relationship with a selected few, but no more than a half dozen.

Following the 0-1-3 rule, select two from your current year’s cohort, two from those who are 12 months ahead of you and, finally, two that are already running a business for more than a year in fields of interest to you. At least one of your cohort should be from you own geography. Alex de Pfyffer of Heritage Holding reports “We relied on searchers in the class above to teach us best practices and share their experience.”

Work with searchers who are following a similar path to yours, as Adam Barker who self-funded New Forest found, “It was hard for me to relate to funded searchers as they have a different strategy.” For the more experienced peers who are a year ahead of you, ensure that they have completed at least 2 LOI’s to give you some guidance about what to avoid.

As with any relationship, it takes effort and both a “give” and “get” to leverage these peers. One searcher established a regularly scheduled call, and was sure to include them on the quarterly update email. It is best that you prepare an agenda of issues to cover that include prospecting, managing interns, dealing with sellers, raising financing, negotiations and creative solutions to roadblocks.

Ask for examples to benchmark against. Reach out and call. Emails and conference calls are too impersonal and some find it intimidating to share with an audience that can’t be seen. Even group meetings have a tendency to just be social events and inefficient ways to share.

Be selective on who else you reach out to

Getting tactical search advice from people who don’t have expertise in the search model and aren’t following your search closely, even if they have extensive business expertise, may leave you feeling like they don’t understand the real nature of your problem nor provide realistic solutions. It is better to seek strategic and industry specific counsel from these wise outsiders.

Lars Gehre at Green Vault observed, “Most of my advisors had a close friendly relationship with me or were professional private equity investors and were not that helpful with their advice, however they made introductions to others who I thought would be better to provide advice.” Another related that “The Private Equity senior colleagues that I thought would have some expertise were very slow in responding to my outreach.”

Even some of your investors may not be appropriate sources of sound process guidance, as one searcher found, “I could not be vulnerable with most of my investors. I had to be sharp, be prepared, and have all the answers. I felt they would be judging my progress”. Other investors don’t want to engage until you have a signed LOI.

However, just relying on peer searchers is dangerous, as Adam Barker observed, “It was generally better to seek out people with the complete opposite viewpoint to ourselves, listen to their view, and try it out. You just have to understand their perspective.”

Be prepared to “give back” to the community

Those considering following in your footsteps may reach out to you for advice around how you made your own decisions to undertake a search. Ben Murray at New Forest says, “Anyone who asked I told them everything and shared everything, it is therapeutic.” Another reported “I have one call per week in average with new or prospective searchers who are looking for advice.”

Offering to help prospective searchers to see how the “sausage is made”, is a great way to give back and much more effective than a phone call. Alex de Pfyffer observed that “We took on MBA interns for a week at a time and put them to work while they were considering this career path.”

Summary

As with many components of a successful search and acquisition, this is a process. Trying to do it alone is a recipe for narrow thinking and diminished creativity. Having a community to draw from which has very directed expertise, will both give you new ideas and also prevent you from making needless “rookie mistakes” along the way.

Search on!

Feel free to share some of your own best practices or experiences in dealing with these issues in the blog comments. I encourage comments and dialog, allowing all to learn from both my views and the views of others – a virtuous learning cycle. Jump right in! I regularly update individual blog posts, add to the Reference section and Search tips, so visit the www.jimsteinsharpe.com website regularly.