Building the Target List

Fundraising for your startup and focusing on the best investors, selling your company and positioning it, and crafting a winning pitchbook are all about considering and targeting the ideal shortlist of buyers for the optimal outcome.

Some entrepreneurs have become especially talented at consistently forging new startups and crafting them from the beginning to be acquired by a specific buyer or group of buyers. They design everything with the exit in mind before they launch. They can be in and out and create immense value and impact in a very short period of time.

It is worth noting that this is the rare exception rather than the common path. Most don't have this kind foresight and experience. Most first-time entrepreneurs don't think this far ahead. Generally those who do start with big aspirations of creating a startup to sell it for big numbers don't get it right when it comes to predicting their most likely acquirer on the first try (at least not from the time that they are pitching their seed round).

No matter at what point you are reading this on your journey—whether you've just started researching your first venture to get ahead of the game, or you're facing a fork in the road, or you're under pressure to find an exit and you're creating your pitchbook—building a target list of buyers is smart and extremely valuable.

The Importance of Building the Target List

What's so important about taking the time to build a list of potential buyers for your company? Aren't companies bought, not sold? What if you already have inbound interest? What if investment bankers want to help out with the process?

In all of these scenarios, building a target list is still highly relevant.

You want to be able to optimize your business to attract these potential acquirers, draw the best offers, and have the right stuff to shop your company and generate competing bids, even if you get a great offer out of the blue.

Following are just some of the benefits of investing a little time in building your target list.

Not Alienating Ideal Buyers

Knowing your buyers means not burning capital, not devaluing your company, and not creating animosity between your teams in advance. It means not creating “assets” with no additional value for them. It also means not tearing them down in the press.

Saving Time

There are plenty of demands on your time during the daily course of business. There will be even more once you begin the M&A process.

The last thing you need is to waste time talking to all the wrong buyers—or worse, getting tied up with them and divulging sensitive information when it isn't going to be a great fit anyway.

This isn't like fundraising when you may be willing to talk to 300 potential investors and pitch them to get a deal, especially when anticipating selling for the largest dollar amounts. You will probably be limiting conversations to a handful of acquirers. Make sure you are talking to the right ones.

Maximizing the Price

If you know who your target buyers are, then you can curate your company for them and your pitchbook. Pay attention to the way you present and highlight what you have and the value for them. What can you de-risk and prove to them to justify a bigger price tag?

Achieving the Best Terms

Being able to curate your company for a target list means being in the position to negotiate better terms and even making them obvious to offer. This can include how they pay, how long they'll demand founders stay on, and more.

Optimal Outcome for Your Team

If you truly care about your team, then you want to find an acquirer who is going to create the best outcome for them as well. That may be financial in the short term, meaningful roles in the medium term, and packages that give them long-term security and opportunities.

Best Future for Your Mission and Product

Targeting your buyers means knowing who will truly be the best fit to carry on the mission, vision, and impact you wanted and who will make the most of the work and products you've created.

Efficiency in the M&A Process

A tight target list means greater efficiency throughout the process. It means not having to divert your teams and burn hours and months creating the wrong materials or pushing unnecessary projects.

ROI on Your Deal-Making Efforts

Whether it is labor hours, your personal time, any commissions, or other investments, a tighter list means a better ROI across the board.

Ways to Identify Potential Buyers

When you want to build your target list, you need to understand your own organization's needs in this process, and then you need to know what traits and criteria you're looking for in potential buyers. To determine who is justified being on your target list, consider the factors in the following sections.

Why Are You Selling?

Which buyers are the best matches for your goals and priorities in this exit? Whether financial or mission-focused, which three to five companies are the best fit?

What Type of Buyer Is the Right Fit?

What types of buyers are the best fit for the stage your company is in and are the most likely candidates to want to acquire you? What motivators are in play that signal these buyers? Are they big strategic or financial buyers and institutions? Or are they other startups?

Culture Fit

Which of these companies offers the best culture fit? This is going to be key to successful integration and the longevity of your work, your team's jobs, and even the ability to ride out any earnout periods.

Ability to Buy

To make your shortlist, they have to have the financial ability to buy you. Do they have enough cash or equity? Do they have the credit and connections if they will be financing the purchase?


Who has enough motivation and the sense of urgency to acquire you? Just like any investor or customer, corporate buyers aren't going to take the action to initiate the process, much less follow through with the process (because of the time it requires), unless they are really motivated.

Competence in M&A

Who is capable of efficiently and effectively pulling off the deal? These deals can be complicated. Some organizations have existing processes and systems and have done it a dozen times. Others may end up using you and your transaction as their first guinea pig.

Trust and Alignment of Values

Ability is great, and so is an attractive offer on paper that checks most of your boxes, but whom do you trust to do what they say to follow through before and after the closing? Who has the values you believe will guide them to do the right thing?

Vetting Buyers for the Right Fit

You should be doing just as much vetting of your buyers as they want to complete on you. This isn't just basic business sense—it will also play well to that buyer that you really care about whom you are selling to, that there is a match, and that you aren't just dumping your company on the first buyer you can.


There is a lot of basic research your teams can do in this process. Your other competitive research, SWOT analysis, and fundraising prep should hold plenty of clues as to where to start looking.

You can easily hit the web to find out the most active acquirers in your space. You can also find out who has recently raised capital, and you can uncover red flags of companies you may not want to engage with.

Some of the online tools you can use for research include the following:

  • Crunchbase
  • PitchBook
  • CB Insights
  • Owler

M&A Professionals

Business brokers, investment bankers, and advisors can all hold significant inside knowledge. They also have the potential to make important introductions. Essentially, this is the role we play at Panthera Advisors and how we provide value.

Interview Others

Just as it is smart to talk to other founders who have raised money from investors before accepting capital from anyone, it can be very revealing to have conversations with other founders who have sold to these companies. The process of engaging a conversation can also say a lot. What worked? What didn't? What should you expect from following the process? What shouldn't you expect?

To find out more, you can also listen to episodes of my DealMakers podcast, where entrepreneurs share how their companies were acquired for millions (or billions).

Remember that history always repeats. Don't try to reinvent the wheel. See what works for others and take out a page from their stories to apply to your own path.

Build Personal Relationships

Everyone talks a good game. Anyone can fool everyone for a little while, but people can't fool everyone forever.

Building personal relationships can open doors, but those relationships give you a whole new level of insight into the individuals and company you'll be dealing with. Those connections will also be the stickiness that keeps them honest after the deal closes and through all the rough patches in between.

Become a Customer or Vendor

Many business relationships end up morphing into something even bigger. This is also often where you'll find strategic acquirers in your space.

If you are a customer of theirs or a vendor to them, it will show you a lot about how the company really does business. You'll see the reality of how the company operates, lives up to its promises, and how competent and efficient it is—at a level you'll only get by doing business with the company over time.

Partner Up

Going even deeper, partnering up with different potential acquirers is another way to really learn about people and test out how things may work in a merger or acquisition. The following section explores the power of partnerships in more detail.

Using Partnerships to Trigger Acquisitions

Partnerships with other companies are not only a great way to grow your business and test out potential acquirers but also they're a powerful tool to trigger acquisitions—in particular, inbound offers. (They make acquirers feel it's their idea.) The process through integration can go much, much more smoothly in these scenarios, too. I have personally seen acquisitions in the hundreds of millions done in just days.

Whom should you partner with? It makes sense to build your target list first and then choose partners.

Who else is up, down, and sideways in your space and would eventually want to expand their ownership of the supply chain, geographic area, or technology and products, which makes acquiring you the next logical step for them to think of?

Show them the benefits through de-risking investments in technology, recruiting teams, product development, and expansion.

Show them how much cheaper, easier, and faster it is to acquire you over re-creating these things themselves. Model the outcomes of returns and growth from partnering together.

Show how much better it is for them to own you compared to the alternative of competing against you. And what if you move on to merge with one of their competitors?

Following are some of the types of partnerships to consider:

  • Cross-selling products
  • Bundling services
  • Licensing them your technology
  • Combining the use of teams, tech, premises, and equipment
  • Building new products together
  • Collaborating on marketing initiatives and events
  • Joint venture investments
  • Limited-time exclusive referral agreements

How to Make Contact with Interested Parties

When you have your target list of potential acquirers, how do you go about getting in touch with them? Figure 8.1 shows a good 30,000-foot view of how to make contact with interested parties.

The following sections explore each of the ways of making contact in more detail.

Introductions and Referrals

Introductions and referrals are still the best way to meet people. This is especially true when the stakes are significant and trust and credibility are determining factors in getting a conversation and being taken seriously.

Depending on the size of the organization, there are several parties you may talk to and several paths to take. The higher up you can enter the conversation, usually the better it is. The people you talk to may be the executive team, the founders, or the CEO. It may be an investor on the board who has the ear of the founder, who is also motivated to find an exit. Or it could be someone in a dedicated acquisitions team.

Schematic illustration of the process of making contact with the interested parties.

Figure 8.1 How to Make Contact with Interested Parties

Who knows the people you need to connect with and has a relationship with them? Who has a Rolodex with these people's names?


Personal networking is a great way to make direct connections and can include professional and organized networking events. (You can always host if you're looking for an event with the right attendee list.)

Casual networking is also an option. Where do these people hang out when they aren't in the office? Is there a certain happy hour you are likely to find them at? Do they have a favorite ski resort, hotel in Cabo, marina, or yacht show? Be there.

Cold Emails

Cold calling still works. In this realm, however, an email is obviously a lot more likely to get through than a phone call. Email is still the preferred method of professional communication. It works for fundraising, and it can work for M&A, too.

Other channels where you can try cold outreach include LinkedIn and Twitter.

Never underestimate the power of social media. I have a friend who sold his company for $150 million, and it happened via a cold message that he received from the acquirer on LinkedIn.

Be So Good They Can't Ignore You

You can accomplish two goals at once by getting noticed. Use that attention to get their attention and trigger the motivation and interest in acquiring you.

Use the press to make noise about what your company is doing and the traction you are gaining. Publish reports and articles on what's next for your industry and trigger people into needing to take action.

If you are ready, push forward toward an IPO or your next fund-raising round. This can often result in conversations turning toward buying you.

As an example, I interviewed Jyoti Bansal on the DealMakers podcast. The announcement of his startup's acquisition happened within just hours of going public. His company, AppDynamics, ended up getting acquired by Cisco for $3.7 billion.

In Jyoti's case, the IPO scenario created an incredible fear of missing out for Cisco, and they ended up paying the price necessary to get them off that track. It was the perfect timing and a great execution by the AppDynamics team.

Move Up the List in Reverse Order

Move up your target list in reverse order. Start working the last potential buyer on the list first. Put the least desirable acquirer on your shortlist.

This strategy has two powerful benefits. First, you will be able to listen and learn a lot about what the people on the other side of the table are looking for, and this can dramatically improve your pitch, presentation, and answers by the time you get to talk to those at the top of the list.

Second, each of these meetings can turn into a referral and introduction to others on your list or meetings with people you may have overlooked.

Use Brokers

Depending on the size of your business and the anticipated exit, there are a variety of types of dealmakers and brokers who can help, from lawyers to business brokers, bankers, and M&A consultants. Interview them; see how they can help you and what value they can offer.

The Golden Rule in Making Contact

In virtually all of these situations, you are not just raising your hand or waving a for sale sign. You want it to be their idea. You approach them for advice, with the potential to work together, or to add value to them in some way.

Keep in mind that they should be the ones to make the first move when it comes to starting the conversation about buying your business.

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