I’ve had literally thousands of introductory calls with venture capitalists, investment bankers, private equity firms and strategics. My lead for this post started off saying “hundreds”, but then I did the math. It’s thousands. That’s a lot of practice in how to deliver my M&A pitch.
When I got my first inbound call had to be back in the mid 90’s. In 1994 we were an early internet company and it wasn’t long before there were calls. I had no clue what I was doing. I’m sure I alternatively shared too much and too little of all the right and wrong data. Fortunately, I learned from that awkwardness and now have a solid M&A pitch.
Understanding the Audience
Over the last several years my M&A pitch was honed and my story consistent. When you think about it, potential partners really just want to know if there’s a fit. They are profiling. And they’re generally collecting the data for their profile in the most efficient, cold and objective way possible—using associates or interns. In most cases, the caller is frantically typing in the background and being careful not to drift off script. (If you want to have some fun, break their rhythm mid-call and see what happens. They’re scripted to chat you up at the beginning, but not in the middle.)
The other thing that often became clear was that they were generally pretending to know far more than they really did. I loved the flattery of thinking that someone deliberately researched and prepared for a call. Nope. I can’t begin to count the number of times I was on the phone with a caller working off of years-old data on my company. Once that became obvious, I instantly lost interest and respect.
The funny thing about these calls is that they’re positioned as a two-way street, where I would get to know the caller’s firm as well. Problem is that they NEVER say anything in their pitch. I wonder if they all know they sound 100% alike? Literally no differentiation, except for perhaps fund size.
Concise and Consistent
I learned to frame these calls as a one-way matchmaking where it was in my best interest to be concise; specific enough to frame our current state; unspecific enough to keep everything private; and above all, consistent. Firms would call quarter-over-quarter and ask the same or very similar questions. This is to determine trajectory and inflection points. To control the narrative over time, I had to be consistent in the data I shared and how I shared it. There was the story and the data to support it. The story stayed relatively consistent as the data behind it evolved to prove it.
Preparation and Accuracy
I never wanted to be wrong. If I ever gave a wrong number, I would correct it in an email immediately following the call. That rarely happened because I would generally take 15 minutes before a call to refresh my numbers and jot them down in a notebook staring me in the face. I put them in the order of the story too, so I wouldn’t wander or complicate the narrative. I would rewrite them even if I had already done a call earlier in the day. I would rewrite them even though I could recite them in my sleep. It was a ritual that worked for me.
NDA as Differentiator
Most of these intro calls were not under a non-disclosure agreement. (And the ones that did ask for an NDA up front were treated differently in a more serious category.) That means everything I gave them could be repeated to anyone and everyone. I thought about that all the time. What would a customer think of this data? What would an employee think? What would a prospect think?
Anatomy of my M&A Pitch
My M&A pitch started with who were were; what we did; who we did it for (and who we sold to); when, where and how we were organized; where we had offices and how many people were in those offices. (So far, everything I said could be scraped off the web, so no biggie.) I’d pause for questions and often get some surface query designed to make me feel more important than I was. I would also reinforce that we were bootstrapped and debt free to rough in our cap table and philosophy. At this point, they had an idea of scale.
Vague, Comprehensive and Credible
I would then get into percentages (NEVER hard numbers) of revenue mix (software/services and recurring/non-recurring). This was neither explicitly public nor sensitive data. It painted a picture of the business financially that I then supported with publicly available customer brand name highlights, the assertion that we had no customer concentration and our overall customer count (also publicly available). Now they had a picture of quality of revenue.
I would close my M&A pitch with statements about our profitability and growth (not defining either, but making clear that we were both profitable and growing). This gave P&L insight without divulging anything specific. I would again ask for questions and stay on the disclosure straight and narrow in terms of my answers.
So why did I waste my time with these perfunctory calls sharing largely public information about my company? Because, for every 30 pointless calls, there was one that ‘got it’ — one firm that would connect us with value; one that would result in a customer or partnership; one that was actually confirmatory rather than introductory — perhaps representing a strategic with specific interest. Ultimately, it was one of these calls that turned into our buyer.