How to cold pitch a potential buyer

A worked example and template to pitch a potential buyer encouraging them to make an offer to buy you.

In a previous article, we ran through the 7-step plan to finding buyers for your business.

The heart of that process is the pitch itself. It's when you first make contact with a potential buyer and tell them that you're open to an acquisition.

We regularly get asked questions like:

  • How can I say that I am for sale without looking desperate?
  • What should I say in my first message?
  • What metrics do I need to include?
  • Do I need a pitch deck, Information Memorandum or 'Teaser'?

In this article, we'll run through a worked example to answer these questions.

Worked example

For this worked example, let's go back to the fictional company Legal Whizz who we used as a case study for The SIX strategies that drive M&A.

As a reminder: They sell software to UK law firms who use the product to build training sessions, courses and quizzes for their lawyers and new joiners. They are growing fast, having brought modern software and a cool brand to an old fashioned industry.

The founders are now considering an exit.

Here's the email that their CEO Chris sent to Simon, the CEO at WonderLaw. WonderLaw are the market leader in the US with a similar product to LegalWhizz.

LegalWhizz did a search for potential buyers through the 7-step plan above and came across WonderLaw, who scored well and seem to be a strong fit.

Here's the email that went from CEO to CEO:

Let's break this down into sections and explain each.

Target

You'll see that this has gone directly to the CEO. This is one of four options for recipients for your cold outreach. It should always be someone senior, and if you think appropriate it can work to target the CEO directly.

More on that here.

Personalise

The key to any cold outreach is personalising the message. You're targeting someone senior so it has to stand out.

Find any excuse to make the message specific. That could be:

  • If you've met, you know someone in their team, or the two businesses have had some contact before, that's an easy place to start.
  • If you have customers or investors in common, that's a good proof point as well as a personalisation, for example: "A customer mentioned your product last week - they love the XYZ feature!".
  • Something you admire about their business, like their branding or the webinars they do.
  • Something you've seen in the press that shows you've done some research, for example: "I saw you've just launched your AI Assistant, that looks like a game-changer".

One-line summary

Now we're into the meat of the email.

Start with a short statement of who are you are and what you do.

If this is completely cold then it's essential. If they already know you, that's still useful as they might forward the message internally.

Avoid the temptation to add loads of detail here about your growth rates and metrics. We add a little of that later, but less is more at this stage.

'We are for sale'

Then you need to tell them you are looking for a buyer!

Many sellers get too coy with this. They use obfuscating language like 'exploring partnerships' to avoid saying out load that the company is for sale.

That just confuses the buyer, and worries them that it might be a waste of time.

But if you want them to make an offer to buy you, you need to tell them clearly that you are interested in being bought.

I understand the concern in looking too keen. There's an analogy to dating here – sound too keen and you look desperate and get a low-ball offer.

That's a fair concern. You certainly need to have a good story for why you are choosing to put such a great company up for sale. We will explore that separately.

One great way to do this is to say that you've been approached by another buyer (so you're in demand!) and so as a result you're seeing who else is out there.

Try this:

We've been approached by a trade buyer about an acquisition, which has prompted us to start exploring options.

Your advisors, if you have them, are experts at smoothing this out and finding the right words. If you're doing this solo, here is some language to use:

  • Considering offers
  • Reviewing investment options, including an outright sale
  • Exploring our strategic options, such as an exit

Pitch the deal

This is your next chance to add some personalisation to the email.

You need to tell them why they should buy you, in a sentence. This should be straight-forward if you've categorised your shortlist of buyers using the list of six strategies for M&A (linked again here).

In this example, the buyer is in the US company who would be buying Legal Whizz to enter into the UK market (Strategy 3). So we call that out here.

This is the best place to sprinkle some extra stats about the business to get the recipient excited. Again, make this personalised to them and to their strategy.

As they're buying you to enter the UK market, we call out that you've got the market sown up already (18 out of 20 clients). Adding some financial information is always useful to show that you're a serious business that's worth their senior team's time.

Close

Then you wrap up by offering to send them some more information and sharing your contact details if they'd like to discuss.

Why no pitch deck?

That's optional.

Some advisors will recommend creating a short 'teaser' document to send around at this stage. This is a one or two page document which has a brief background on the company, details of the product and management and very high level financials. You should adjust it depending on who the recipient is and what info you want to give them.

If you're working with an advisor, they will prepare this for you to review. It helps you look professional and organised, and helps to put your key stats up-front.

If you're solo at this point, you might want to skip it and save that document for later.

The downside of sending a teaser is that you're sending that document to a relatively long-list of people who haven't confirmed their interest in you (or signed an NDA). There's a good chance that gets shared more widely, which you might not want. To combat that risk, much of the detail tends to gets removed and the document becomes a bit pointless...

Working with advisors

If you've already hired an M&A advisor at this stage in the process, they will be helping you to create a shortlist of targets.

The best ones will know instantly who's in the market to buy a company like yours, and they have personal relationships with senior decision-makers who trust them to bring deal to them.

So who should make the initial contact?

If it's a contact of there, they will take the lead on this and reach out on your behalf. If you know the company already, then it's probably going to be you that's reaching out. They can help in the background with preparing the email content.

If it's a completely cold lead to both of you, then it could be either that makes the approach – it doesn't matter too much.

Pitch Email Text

If you're on a mobile, or are struggling to read the text in the images, here's the full text of the email:

Subject: Introduction to LegalWhizz

Hi Simon

I'm Chris, the CEO at Legal Whizz.

You might remember that we briefly met at the Legal200 awards dinner back in September - I was sitting with Jane from your team.

If you haven't heard of us, we're the leading provider of software to UK law firms to help them organise and run courses to train and up-skill their staff.

We've recently started a review of strategic options and are considering potential acquisition offers. I wondered if you want to be involved in that process?

I'm not sure if you've considered expanding into the UK market, but if so Legal Whizz could be the perfect fit. We work with 18 of the top 20 UK law firms by size, including Smith & Allen, Fieldlaters and Fishers. We're profitable and expect to do over £8m in sales this year.

If you might be interested I can send you a short teaser doc with some metrics.

My mobile is below if you'd like to discuss.

Thanks
Chris

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