Strategies for Off-Market Deal Flow
Hey there deal makers,
Welcome to the Better Business Brief, where I share takeaways from:
- running a business I’m building to sell for millions
- my consulting with business owners building to sell for millions
- tips and tricks you can use to do the same
In the process of now building a private equity fund from scratch, I have learned a lot about generating opportunities. After all, sourcing deals of businesses that are ready and willing to be acquired is the lifeblood of creating a fund like this.
I get asked all the time how I generate opportunities like this, and there are a few things that have worked for me. This one is for people who are looking into buying a business, or trying to help source deals for private equity.
So today, in less than 5 minutes, I’ll give you:
📜 The 4 Tactics That Work for Me
🗺️ HOW to Execute Each Correctly
🧠 WHY You Should Do Them All
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There’s one thing in particular I absolutely must go over first. This is the one you won’t expect would have anything to do with your search, but is the most fundamental.
1. Get specific with yourself: |
There are so many people that are just “looking to buy a good business”, but have no idea what kind of business. While you need SOME flexibility, this mindset is a complete trap, and will keep you from finding opportunities. If everything is an opportunity, nothing is. You will get caught in the thralls of paralysis by analysis, never being sure of whether a business is a good fit. How do you get specific? If you’re a beginner, I think there are 2 good routes:
Either pick a type of business to look for that is very uniquely suited to you and your background and that you have an “unfair advantage” in, or pick a type of business that is as basic and recession-resistant as possible (the latter has been my strategy). I would encourage you to choose this industry or at least a sector before you actually get into your search, because it will simply help you hone in on opportunities and recognize them more. In the next few tactics, I’ll explore why this is important too.
Here are the types of people you need to constantly find, meet, and get in the good graces of: Business Brokers (#1), busy business consultants, accountants/CPAs, financial advisors, lawyers, investors, and fund managers. Simply be a great and nice human, try to connect with these people personally, keep in touch, lead with value by asking first how you can help them, and make sure they know what you are looking for. This is where the first tactic comes back into play as well. If you have gotten very specific, (think “I’m looking to buy a 5+ year old painting company doing at least $1 million in revenue” vs. “I’m looking to buy a business”) then the people you meet and network with will get what I call prompted. They will get specifically reminded of opportunities within their own networks that might apply to and pertain to you. This is the gold. If you can get referred to a business owner that wants to sell by someone they already like and trust, you have built in goodwill. Being specific just makes sure people know which opportunities to send your way.
This has been the highest leverage thing I do. There are two types of content that have been helpful for me with this. The first is content that helps business owners assess the viability of selling their business. I create educational videos that help business owners understand the process of selling their business and how to do it best. The second is simply documenting what is going on with building the private equity company. The other day, I had a business owner that fits our deal criteria incredibly well apply on my website to be acquired by our fund, because he saw my videos on TikTok. This is (in my opinion) a lot better than when I start talking to someone that I reached out to because the person reached out to me with already proven interest in what I want to discuss with them. The conversation flows easier and there is less “selling” to do. Again, I have to reiterate that if you are specific with your content, you will be more effective and the specific types of businesses you are looking for WILL find you.
While I must say I prefer when someone comes in via a referral or content, the reality is (especially early on while you’re finding your footing) you won’t have a good enough network yet or good enough social media presence yet when you get started to immediately generate ENOUGH opportunities to make this happen. One of my partners who has rolled up 7 dental practice businesses by acquiring them told me that in this process, of 10 business owners in the INDUSTRY he was looking at, only maybe 1 would be a right fit. That means you have to speak to A LOT of potential sellers to find one that will go all the way with you - it’s like dating. The cold outreach in my opinion is the consistency that keeps things rolling while you build up the other ones. The thing that has been the most successful for us has been cold email outreach. We use a platform called ReSquared that helps us build a list of local businesses and email 50 per day asking about whether they’d like to talk more about being invested in. We got our first home service company under management with this tactic.
As I got into above, while the networking and content are great, they often aren’t enough to get you real traction from the jump. You get specific first to help refine all the other tactics, you do the content and networking until you get so good at them that opportunities just come flying at you constantly, and you do the cold outreach to keep the lights on in the meantime.
All of these are useless if you don’t actually do them though. As I bring this edition to a close, I’ll leave you with a piece of homework. Decide TODAY what the minimum amount of these is that you can actually do every single week. Then begin actually doing it. Don’t get lost in thought or fear of the unknown. Just START. After all, you don’t HAVE to buy anyone’s business. Just the sheer activity of doing these things will help you get more and more refined in your plan and your craft, so the earlier you begin, the better.
In the meantime, if you’ve been following along, and are curious where I’m at with building my private equity company from scratch, I did a video recently where I explain how Private Equity funds make money and what our personal strategy is. Check it out here: https://youtu.be/kN3BmNP2xbM
If reading this sparked ideas about how you might be able to better create your own deal flow, or if you still have questions about all of this, I’d love to talk about it: Grab some time here and we can talk about how I might be able to help.
Be great. Keeping growing and aspiring. And as always: I hope you got something from this.
If you did, share it with a friend who may too, as this is the best way for me to grow it and make this better.
They can even sign up here :)
Happy value-building to all of you!
See you next time for Better Business Brief,
-Brody
