Over the last 5 years, we’ve seen tremendous growth in the search fund ecosystem. The number of search funds being raised each year has almost doubled, from roughly 60 a year to over 100. Business schools across the US are offering more classes and focused programming on entrepreneurship through acquisition, covering everything from how to raise a search fund through to small business leadership. At the same time, we’ve seen an explosion in the tools and technology available to search fund entrepreneurs. Databases with contact details for millions of businesses (of all sizes) are now available with a single subscription. Generative AI can draft “personalized” notes in seconds, not hours.
This evolving landscape creates both opportunities and challenges. On the one hand, today’s searchers are better prepared and equipped than they have ever been. The search fund model itself is more widely understood and accepted by business owners as a legitimate exit route. And, there remain plenty of attractive businesses available for search fund entrepreneurs to buy. On the other hand, more searchers creates more noise. Mass market tools and technologies make it easier and quicker to find and contact business owners. Sellers are inundated with inbounds.
Standing out has never been more important. In our experience, sellers to search fund entrepreneurs don’t simply decide to sell their business. They decide who they want to sell their business to. As a search fund entrepreneur, your goal is to find your seller.
“Dan [Calano]’s value proposition was different. He was committed to long term partnership and growth. He was exactly what I needed.” Mark Moreau, Founder, UtilityCloud
So how do you do that?
Finding your seller touches on a lot of aspects of a successful search. Several pieces of the puzzle - from search strategy, sourcing channels and even a bit of good luck - need to fall into place for a search fund entrepreneur to be that one in a million, rather than one of a million, to a seller. I want to take a deeper dive into just one ingredient of a successful search: seller outreach. Our team has been gathering data from and conducting interviews with business owners and search fund entrepreneurs alike on what effective seller outreach looks like in today’s environment.
Here are our top three takeaways:
Less is More
Our research shows that the best response rates (25%+) belong to the searchers who have a more targeted strategy, where they are sending tailored messages that seek to build authentic relationships with sellers. And while you may be able to get 25% response rates with a slightly higher-volume strategy, remember that it’s the positive responses that matter. We find higher-volume strategies tend to lead to lower-quality responses, with owners who are less likely to sell or unwilling to help you in your journey.
We are often asked by search fund entrepreneurs for a “target” number of contacts to make. Remember that outreach isn’t the end goal; rather - your goal is to spend time and build relationships with business owners in your target industries. So, be judicious in who you reach out to and how you build that relationship.
Experiment & Get Creative
This leads me to my next point. The proliferation of mass-market tools means that an email-only outreach strategy is unlikely to differentiate you from other prospective buyers. Use multiple avenues to find your seller. Hannah Greenberg and Alex Lopez (CEO and President at Eleven Software) used hand-written “Happy Retirement” cards, which they personally delivered to business owners. Luka Salmunic (CEO at Triyam) shared a short video clip of himself. Elise Polezel (CEO at HigherMe) used off-the-beaten track channels such as industry newsletters to forge new connections.
It’s important to remember that what worked before won’t necessarily still work today. But what all these techniques have in common is a searcher (or pair or searchers) who was creative enough to think outside the box, and audacious enough to try. Test, learn from your experiments and improve.
Connect over Common Interests
This might sound blindingly obvious, but it’s remarkable how easy it can be in the midst of a search to forget that the person at the end of an email, phone call, or conversation is exactly that: a person with lived experiences, interests and dreams for their own future. What often separates a search fund entrepreneur from any other buyer is their fit with the seller.
“From the first meeting, we felt a strong fit with Ryan [Turk]...he had a real, and personal, understanding of what we did. And, we built a strong personal relationship. The good feeling and trust sold us that Ryan was the right buyer.” - Barrie Laing, Seller, Radiation Detection Company.
Search fund businesses aren’t bought from behind a computer, or over a conference table in a board room. Rather, two people come to an agreement on the basis of trust, mutual respect and a shared understanding of each other’s motivations. Double down on finding common threads that could relate you to the person it is that you’re speaking to: your background, your hobbies, interests, school, events you’ve attended, and more.
Your story is uniquely your own.