Key takeaways:
- Save valuable time by building buyers lists faster and more efficiently with the right tools in place.
- Traditional list-building methods remain foundational, but are now being improved by AI tools that enhance the buyers list building process.
- AI platforms like Inven accelerate buyers list creation by intelligently screening companies, applying filters, providing contact details, and analyzing PE firms’ investment histories and sector focus.
Building a comprehensive buyers list is a critical component of successful sell-side M&A advisory. This article explains the process of creating an effective buyers list, and introduces both traditional and AI-driven methods used by sell-side investment banks to build lists faster and more precisely.
What is a buyers list?
A buyers list is a curated database of individuals, companies, or entities who could potentially be interested in acquiring a specific company. Investment banks initiate interest and share materials (such as a Teaser, IM, and Management Presentation) about the company on sale with the potential buyers.
The significance of a well constructed buyers lists in sell-side investment banking
In sell-side investment banking, the buyers list can directly impact the speed, outcome, and value of a deal. That’s why a well-curated buyers list is essential, as it ensures that the right buyers are contacted at the right time.
Because targeting the wrong buyers can waste time and resources, by selecting buyers whose acquisition criteria, focus, and financial capacity all align, investment bankers can focus their outreach on those most likely to engage, submit offers, and stay on track with the process.
Additionally, having a high-quality list of potential buyers ensures that outreach, follow-ups, and negotiations are done smoothly. If a top-ranked buyer passes on the opportunity, the advisor can immediately move to the next most suitable buyer without sacrificing time and resources. This helps maintain deal timelines and reduces the risk of a stalled or disrupted process.
This also plays a critical role in maximizing value for the client. By contacting multiple qualified and interested buyers simultaneously, an investment bank can generate competitive tension around the deal. This competition can lead to better pricing, more favorable terms, and a higher likelihood of securing a deal that aligns with the client’s strategic and financial objectives. Without a good buyers list, this dynamic is lost.
Buyer List Building Strategies
Wondering how to build a buyers list? Here are a few traditional ways and a bit more swift AI-based method to improve and perfect your buyer list building.
Traditional methods for building buyers lists
Industry research: Investment banks conduct in-depth market analysis to identify potential acquirers within specific sectors. This research helps them understand industry dynamics and identify companies with strategic alignment and financial capabilities for acquisitions.
Networking: Establishing strong relationships within the industry is crucial. Investment bankers leverage their professional networks, attend industry events, and participate in conferences and seminars to connect with potential buyers and stay updated on market trends.
Referrals and recommendations: Referrals from trusted sources such as lawyers, accountants, or industry experts can provide valuable leads when constructing buyer lists. These referrals often come from professionals who have insights into potential buyers looking for acquisition opportunities.
Direct outreach: Investment banks proactively reach out to potential buyers through targeted email campaigns, personalized invitations, or direct phone calls. This approach allows them to showcase specific investment opportunities and gauge interest from potential buyers.
AI-driven methods for building buyers lists
AI-powered strategic buyer identification
AI-driven tools, such as Inven, help sell-side investment banks in the process of finding strategic buyers and building buyers lists, as these tools provide specialized software that can scan through millions of company websites to identify potential buyers. These AI-powered tools help list buildings in various ways.
For one, AI platforms can utilize intelligent screening processes to zero in on key data. AI can determine which companies align with the interests and objectives of the ideal target. This significantly reduces the time and effort required to compile a list of strategic buyers.
Through applying filters, AI can help to refine the search for strategic buyers. For instance, it can focus on companies with employee titles that indicate that these companies are actively seeking acquisition opportunities, such as "Corporate Development" or "M&A Manager."
Contacting potential buyers can be a time-consuming process. AI-platforms like Inven, that provide contact data can simplify this task tremendously and elevate the outreach process, by reducing time spent on finding contact details
Get more tips on how to use Inven to identify potential buyers.
Using AI to find Private Equity buyers
AI's capabilities extend beyond identifying strategic buyers; it can also aid in finding suitable PE buyers for the company being sold. This process involves a deeper understanding of the target company and the specific industry it operates in. Here's how AI tools like Inven help with PE buyer identification:
- Industry Focus: AI tools like Inven can analyze the nuances of various industries, going beyond general industry codes. For instance, while traditional tools may categorize a company as "manufacturing," AI can discern specific aspects such as "manufacturing aluminum products for the automotive industry." This level of precision helps identify PE firms that focus on this specific niche and have a genuine interest in the target company.
- Investment History: AI can analyze the portfolios of PE firms, identifying their past investments in companies similar to the one being sold. This analysis provides insights into the preferences and focus areas of PE investors, helping investment bankers create a more targeted and compelling pitch. Filtering PE backed companies with Inven's tool can uncover potential buyers from the same industry.
- PE Focus Areas: By studying investment strategies, sector preferences, and even the individual industries PE firms favor, AI can build a comprehensive picture of potential PE buyers for the target company.
AI is changing how investment banks work. It saves M&A professionals valuable time in buyer list building, but also in acquisition target search, market research, and other manual tasks.
Building a Buyers List: A Step-by-Step Guide
To summarize, a buyers list is a catalog of strategic investors, financial buyers and entrepreneurs actively searching for their next acquisition. The list of buyers is compiled by M&A advisors, investment bankers, or business brokers managing a company's sale.
The process of creating a buyers list involves several steps.
- Gathering a broad pool of potential acquirers by utilizing existing contacts, network, AI-powered tools and company databases.
- Evaluating each contact for their compatibility with the selling company. This compatibility assessment takes into account factors like the buyer's business practices, strategic goals, acquisition criteria and overall fit with the seller's vision.
- Ranking the potential acquirers and prioritizing the most potential buyers which receive teasers, with the aim to generate an "indicative offer" or formal expression of interest from multiple buyers on the list.
- If the top-ranked candidate doesn't express interest, the next step is moving down the list, strategically engaging with the next most suitable buyer.
Building a Winning Buyers List
Building a buyers list is a critical process for sell-side investment banks. While traditional methods can offer opportunities and new connections, AI-driven methods are unique in their extensive search capabilities. These tools provide access to companies in global markets and advanced data analytics. Combining networking and referrals with dynamic AI methods allows investment banks to create more exhaustive buyers lists that align with their clients' objectives.
To find out how Inven suits your process and get a free buyers list demo, book a brief meeting.
Author: Konsta Saastamoinen
Expert in Deal Sourcing, M&A
Konsta Saastamoinen is a seasoned deal sourcing and sales professional specializing in helping investors, investment banks and M&A professionals find relevant companies and acquire businesses. With a deep understanding of online marketplaces and AI-driven deal sourcing, he has helped countless professionals secure profitable opportunities.
His highly-rated webinar (4.8/5) on using AI for business acquisitions has helped M&A professionals find hidden gems in the market with precision and speed. Whether you're a first-time buyer or a seasoned investor, Konsta’s expertise helps you streamline deal flow and close successful acquisitions.
