Where 114 searchers say they’re finding deals

This Week in ETA:

• Searchers: We surveyed 114 of you to learn more about your search challenges and the kinds of companies you’re hoping to buy. I shared some of the findings here. If I were searching right now, I would try to zig where most of the world is zagging (especially by looking for deals outside the normal places of brokers/marketplaces, etc., check out the bottom half of side 5) 

• Investors: Building relationships with searchers pre-LOI is extremely time-consuming… but worth it. The searcher is the most important piece of the puzzle and tricky to diligence, and getting to know people over a longer period of time is proving to be very impactful. 

Plus:

• Negotiating purchase price with a seller after an initial offer - often called a re-trade - is a delicate matter. We don’t recommend using inflated or low offers as a re-trade strategy, but sometimes diligence findings justify a price adjustment. Here are a few guiding principles from Eli Albrecht if you have to re-trade.

• I’ve said it before: Raising additional equity upfront can really pay off when post-close surprises show up. Check out this comment from Samson Kay, a searcher I invested in personally, who shares his experience. An extra $100K in the bank (and the peace of mind it provides) is usually worth giving up a few more points of equity.

Question:

Hit reply and tell us - how do you think about the risk/reward of searchers “over-raising” a bit of extra equity to give the business more post-close liquidity?