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Advisors, Private Equity

5 Reasons CEOs Don’t Want to Talk to You — And What to Do About It


The sound of the phone hitting the receiver has become all too familiar for M&A advisors and business brokers as they call upon CEOs in hopes of winning their business. The truth is the cold call method of business development becomes especially frigid when reaching out to CEOs who are heads down running their businesses and may not be thinking about, or may want to think about, preparing for an eventual sale.

From talking to so many CEOs who sit at the other end of these calls, we’ve identified a few of the most common reasons advisors get a sometimes not-so-polite “no” when offering their services, or simply trying to make an introduction, to the middle market’s most promising companies. Here are three key reasons CEOs might not be open to a conversation, and how to convince them otherwise:

1. I’m too busy running my business.

Whether willing to admit it or not, most CEOs, particularly those of small and mid-sized companies that are highly involved in the day-to-day operations of the business, do think about what will happen when they sell. It just so happens that it only gets a very small share of their brain, competing against the seemingly endless list of immediate priorities they have.

As an advisor, pitch your ability to be the “eyes and ears” of a CEO who is transactionally curious, but doesn’t have the time to stay on top of the goings on in his industry. We recently talked to one CEO who keeps an advisor on retainer simply to send him the news and details of any closed transaction in his immediate market. Every CEO likes to stay informed on his competition and no one wants to see an opportunity pass him by, so be the one who can bridge the gap.

For larger companies who may have business development staff or a CFO, offer yourself as their right hand man, and relieve the CEO of the “burden” of needing to manage the relationship or digest all of the information you can provide.

Related Reading: M&A Advisors: The Overlooked Value Maximizers

2. I’m not ready to sell my business.

It’s no wonder advisors get some frustrated responses in their outreach to CEOs. Not only is exiting one’s business a major undertaking, but a fairly emotional one. Not everyone is able to think openly about moving on from the company they’ve spent their blood, sweat and tears on to build (not to mention it’s probably their largest financial asset). A 50-year old CEO of a Midwestern manufacturing company recently told us “I’m just getting started…I’ve got a long way to go” when we asked him why he wasn’t taking calls with intermediaries as he grew his business toward an eventual liquidity event.

For the CEO who may be 3-6 years out from selling his business, pitch him on preparedness. It’s never too early to start planning for the biggest transaction of your life and the sooner you start, the better, and less stressful it will be. Spend time mapping out for a CEO how you would approach a multi-year relationship even if it’s informal at first. Explain to him the important milestones in a business’ growth cycle that ready it for a successful sale or tell him a story of a business owner in his same shoes who by working on his business years in advance helped score the best deal to supply a promising future for him and his company.

M&A advisors have been proven to help CEOs improve the valuations they get for their businesses when they do sell. Articulate your ability to help a CEO identify areas of potential value creation and anecdotes of how you’ve helped companies like his do so.

3. I’m keeping the business in the family.

For family-owned and operated businesses, advisors who start the conversation with an offer to help identify the best buyers can get stopped quickly in their tracks if a CEO is planning to pass the business down to the next generation.

You might want to enlighten him (non-confrontationally of course) that only 30% of businesses make it to the second generation. The numbers look even more grim beyond that. Even if a family heir is planning on taking up the CEO seat, it’s likely they’ve spent virtually no time thinking about the financial future of the business or how they will extract liquidity from it eventually. Just as a CEO might pass along relationships with his lawyers and accountants, gifting a newly minted owner-advisor relationship puts the new CEO, and the business, in the best possible standing should a sale come on sooner than expected or should the business need capital to continue a growth trajectory.

4. I want to talk to buyers directly.

Perhaps you think you’ve struck gold as you work your way through a call list and happen upon a CEO who is actually ready to sell. This savvy CEO has had significant inbound interest or has done his homework on the potential buyer landscape, and says he’s ready to talk to them directly. He’s not thrilled about the idea of an “intermediary” slowing down his process.

There aren’t many CEOs out there who will argue with you if you present him with the opportunity to avoid wasted time. One of the key attributes of a good advisor is an ability to screen potential buyers and differentiate those with genuine intent from the “noise”. Pitch your understanding of buyer motivations and your skill in sniffing out those who may be less than serious.

Being the keeper of the keys can also help to create competition in a deal process. Great advisors are particularly adept at keeping multiple, relevant bidders engaged simultaneously. Explain to CEOs how concurrent interest from several interested parties is critical to finding the best buyer and achieving the best sale outcome and show him examples of where it’s worked in someone else’s favor.

Related Reading: M&A Advisors Proven to Improve Valuations

5. I don’t want to pay a retainer

Advisors who charge retainer fees for their services (versus just a success fee upon the close of the sale) may experience some push back from CEOs. While it’s tempting to tell a CEO that you’ll only get paid when (and if) the sale is completed, many of the advisors we talk to have success in pitching the retainer model. This signals to a CEO that there’s work to be done before bringing the company to market in the most favorable way. Level with the CEO – he’s worked long and hard to grow his business – how could you possibly sell it without equal attention and effort? Advisors who put a price tag on the entire process rather than just the outcome are often received much better by CEOs who want to make sure they are putting their, and their business’ future, in the best possible hands.

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