Selecting your search name
Many searchers inadvertently turn-off potential sellers by choosing a name for their search firm that fails the test of being “seller friendly”. The code words that make your firm impressive to investors are often the same terms that send a seller running for the hills. Your search firm name, like your entire search process, should be focused on the seller.
When an owner is considering selling their “legacy”, he or she looks for clues to reinforce the reason to select you. Words convey meanings and are viewed by others as signals of your intentions. If incorrectly chosen, these words may result in concern, fear, worry and judgment about you. Don’t worry about what your banker, investors, work colleagues, or significant other thinks about the name of your search. A prospective seller counts the most.
Here are the most popular, and potentially toxic, search name words used over the last 20 years by 120 different searchers:
Capital – Sellers will love this word! They immediately think that you have lots of cash, and, because of this cash, they are glad to speak with you! When you tell them that not only will other investors and bankers be providing some of the funding but also that they will be “helping” fund the acquisition through a seller note, they may be surprised – and turned off. Developing a basis for trust is critical at all stages of your interactions with the seller, don’t get off on the wrong foot.
Partners – This should only be used if you are searching with an actual partner. Otherwise, what will you tell the seller who asks “So who are your partners and will they be coming to help you run my business?” Instead, the seller wants to hear, “you are looking at the one person who is going to take over your business “. If there is really no “partner”, you start off with a lie…so much for developing the most important thing you need between you and the seller – trust. (Charlie Green has great work in this area – www.trustedadvisor.com).
Equity – Owning stock in a company is a very attractive concept for most searchers, as ownership and equity go hand-in-hand. Sellers typically have spent their careers zealously guarding their company’s equity. When they see ‘equity’ in your name, they may be confused as to what kind of equity you bring! You want to find ways to convince the seller that you are different than the Private “Equity” firms that have been knocking on their doors. PE firms have portfolios, but you are looking for just one business to own and run.
Ventures – After all, you are the founder a new company, and this is a venture to you. Sellers, in contrast, are thinking about their long-term legacy, not a new, quick concept that could be associated with “nothing ventured, nothing gained”! Using the plural, ventures, can be a red flag for owners who want their business to be your only focus, since it has been their only focus.
Growth – Investors like this word and, of course, you want to grow the business you purchase. However, a seller may be defensive about their own growth – a reminder of their own failure! Growth is difficult to manage and if they have experienced this challenge, they may be put-off by this emphasis.
Management – This word has had great success for consultants and bankers. A seller will drill down deeply into your own skill set, experience and ”management” capabilities to assess your skill set to manage their business. In comparison to themselves and their existing management team, you may come up short in their minds.
Investors – You are proud of your investor or advisory pool, especially their credentials and business acumen. The seller, in contrast, may be intimated by these backers and their experience with larger companies or financial institutions. The owner wants to be comfortable interacting directly with you, not with a host of other characters.
Location – 10% of searchers use a name with a geographical connection, especially a geographically focused search. Remember that scopes can shift over time. However, explaining why Frisco Capital or Denver Equity is interested in purchasing a business in Florida will be a stretch for an owner.
What does work best in selecting your name that will focus sellers?
The most successful names have a “story” behind them. The best stories are personal to the searcher and unique and memorable to the seller. Mountains, rivers, hometown or background references may all have special relevance to a searcher. But don’t get too cute. “Reticle Partners” is innovative, but too complicated. “8 Wire Capital” sends a confusing message. Paul Thomson, a Scotsman with a strong brogue accent, decided to “feature” this “weakness” by using the name “Scottish American Capital” (OK, so he got two-thirds of it right!). Elm Grove Partners, formed by Nic Anderson and Tristan Hopkins works perfectly for them.
It is never too late. In my own search, I trashed my first set of business cards with “Sharpe & Associates” after a potential seller asked who was working with me and where my father was – a good reason not to use your own name. Max Sadler from MIT Sloan launched Kalpana and changed the name to Inman Square. Kalpana was too hard to spell and too challenging to explain. “The name was picked because I liked the way that it sounded. It just made my life so much easier to leave it behind”, he says.
Before you make a commitment, do a quick web search. “Hamilton Reynolds” comes up on the first page of a Google search as a sex-scandal during President Washington’s term in office; memorable, but not a good thing to have to explain! Also, avoid political, religious or controversial subjects – don’t give the seller a reason not to like you before you get your foot in the door.
You may never know whether your targeted sellers are put off by your firm name. Hearing the truth about their perceptions is very rare in dealing with owners.
In the end, a name consisting of a few words with just ‘LLC’ after it seems to avoid any “signaling” to the seller and should be an easy website domain name to obtain. The best search firm names are distinctive, differentiating you as the ideal successor to the seller. You have a lot in common with the seller – both of you don’t like following the crowd, and both want to build a company of enduring value. Don’t let your firm name turn-off a potential seller before they see your value, instead use it as an opportunity to start build their trust in you.
I encourage comments from readers and dialog about the topics which allows others to see the commentary and learn both from my views and the views of others; a virtuous learning cycle. Jump right in!