M&A Process | Using Targeted Campaigns to Sell Your Business

Jacob Orosz Portrait
by Jacob Orosz (President of Morgan & Westfield)

Executive Summary

Is a targeted campaign right for you and your business?

A key consideration for developing a marketing campaign is the size of your business.

  • For small businesses, confidentially marketing your company on specialized portals is the most effective strategy.
  • For mid-sized businesses, we also recommend targeting additional potential buyers, such as competitors and other companies, through direct, targeted campaigns.

With a targeted campaign, we reach out directly to potential corporate buyers — many M&A advisors call this a private auction. This involves compiling a list of potential corporate buyers and then contacting them directly through emails, letters, and phone calls. Corporate buyers can also be targeted through select trade publications.

There are advantages and disadvantages to selling your company to a corporate buyer or competitor, so it’s important to proceed carefully. Targeted campaigns are not recommended for every company.

In this article, we explain how targeted marketing campaigns work, and we discuss their advantages and disadvantages. We also take a look at the different types of corporate buyers and who is most likely to be interested in your business. Finally, we go over the best process for reaching out to those buyers and outline the fees associated with this approach.

If you’re not sure how to respond to the question we posed at the top of this article — about whether a targeted campaign is right for you — you’re about 15 insightful minutes away from an answer.

Advantages and Disadvantages of Targeted Campaigns

Advantages of Targeted Campaigns:

  • Experience: A competitor will already be familiar with the industry and marketplace and will likely be motivated to purchase your business as a means of expanding their market share.
  • Knowledge of Industry: They may be more knowledgeable about what it takes to purchase a business. This means the transaction may go more smoothly than would be the case with an individual buyer who has never owned a business.
  • Price: In certain industries, a competitor or corporate buyer may pay significantly more for your business than an individual buyer.

Disadvantages of Targeted Campaigns:

  • Confidentiality: It can be risky letting your competition know that you want to sell your business.
  • Low Probabilities: In some industries, the probability of selling to a competitor or corporate buyer may be very low.
  • Price: In certain industries, a competitor or corporate buyer may pay significantly less for your business than would an individual buyer. This situation is especially true if it’s easy for the buyer to replicate your business at a lower cost than your asking price.

Determining if a Targeted Campaign is Right For Your Company

Size: Selling Small vs. Mid-Sized Businesses

  • Selling a Small Business: Small businesses — those with less than $5 million to $10 million in annual revenue or less than $1 million in EBITDA — are purchased by individuals 95% to 99% of the time. Companies account for the other 1% to 5% of such transactions. Targeted campaigns are suitable only for a select number of smaller businesses.
  • Selling a Mid-Sized Business: Targeted campaigns are almost always suitable for middle-market businesses with EBITDA greater than $1 million to $5 million per year.

Buyers: Individuals vs. Corporate Buyers

  • Individuals: Individuals are more likely to purchase small businesses. The most efficient and cost-effective method of contacting individual buyers is through targeted forms of media such as web portals and trade journals in which individuals have identified themselves as potential buyers. In other words, this group of people has already been corralled for you, thus making the process more efficient and cost-effective.
  • Corporate Buyers: Companies are more likely to purchase mid-sized businesses. Most corporate buyers are looking for businesses that generate at least $10 million in annual revenue. There are always exceptions. For example, in industries where growth is a zero-sum game (e.g., landscaping), competitors regularly acquire small businesses.

Types of Corporate Buyers

Here are the different types of corporate buyers:

  • Direct Competitor, Different Geography: The business is in the same industry, and may be looking to expand into your area. Listen to a podcast I did with the head of M&A for an $18 billion company who regularly acquires direct competitors in different geographies.
  • Direct Competitor, Same Geography: The business is in the same industry and same geographical area as your business. This is common in “zero-sum” industries where the industry is no longer gaining market share, or growing, and competitors are fiercely competing for market share (e.g., commercial cleaning, lawn care, etc.). In these industries, it’s often more cost-effective to acquire a competitor than attempt to increase market share through advertising.
  • Indirect Competitor: In this instance, the buyer may be interested in expanding into a new market or selling their products or services to your existing client base. For example, a food distributor may be interested in purchasing a food manufacturer. Rather than build a business from scratch, they may be interested in simply acquiring yours. If you choose to approach a company you think may have this synergistic potential, be prepared to clearly and concisely demonstrate the potential and the competitive advantages of your business.
  • Customers: Often, your best customers are your biggest fans. They promote your business within their circle because they like what you offer. They may make large purchases regularly, or they may have approached you about business deals, offers, or opportunities in the past. Don’t overlook this critical group of potential buyers.
  • Suppliers: Businesses will commonly acquire other companies they are already connected with. Rather than outsourcing their product or service to you, it can be more profitable and part of their acquisition strategy to bring your services under their corporate umbrella. This type of acquisition can complete the value chain for a company expanding into new industries or areas.

Do Small Companies Buy Businesses?

Smaller companies typically grow organically by gradually increasing their marketing and advertising budgets. Most of them are in a state of disorganized chaos, busy chasing the next big deal or new big customer, and they do not have enough time or cash reserves to pursue acquisitions as a growth strategy.

Attempting to sell your business to a smaller company often proves to be an ineffective strategy that can waste an enormous amount of time.

EBITDA, EBITDA, EBITDA: Again, the primary criteria larger companies use to determine if an acquisition makes sense is EBITDA. These companies look for a minimum annual EBITDA of $1 million to $10-plus million.

Why? The answer is simple — it takes just as much time to do a $1 million deal as it does to do a $25 million deal. Also, the professional fees involved in these acquisitions are similar regardless of the transaction’s size, though the fees may be just slightly higher for larger deals.

For example, a $1 million deal may command fees and expenses of $50,000 or more (5% of the deal size), while a $25 million transaction may command fees of $150,000 to $300,000 (0.6% to 1.2%). This means that the percentage of fees and expenses decreases as the size of the deal increases. Doing larger deals is, therefore, more cost-effective for the buyer.

A company must invest in 25 businesses — each with a cash flow of at least $1 million per year — to have the same impact as buying a single company with an annual cash flow of $25 million. So, buying larger companies is more efficient, both from a cost and time perspective.

The Ideal Corporate Buyer

Here are the characteristics of the ideal corporate buyer.

  • The corporate buyer has made previous acquisitions. Approach only those targets that are ready, willing, and able to take action. You will know this by researching the company and determining how many acquisitions it has made in the past one to five years. The more acquisitions or companies the corporate buyer has made recently, the more likely it will buy another company.
  • The corporate buyer should generate at least $10 million in annual revenue and be at least three times the size of your company. An overwhelming majority of smaller companies are not ready, willing, or able to spend millions of dollars to purchase a competitor. There are exceptions, but in general, only mid-sized and larger companies grow through acquisitions. Be particularly wary of smaller companies with revenue of less than $10 million per year that contact you. Why? Smaller companies tend to be busy putting out fires and chasing the next big customer rather than proactively creating a team focused on developing and executing an acquisition strategy. While these deals do sometimes happen, the ideal corporate buyer will generate at least $10 million per year in revenue and be at least three times your size. If your company generates $5 million per year in revenue, for example, the ideal buyer should generate at least $15 million annually in revenue.

Process for Targeted Campaigns

When we conduct a targeted campaign, we work with the seller to prepare a list of potential buyers, including corporations and competitors. We then send the buyers a copy of your Teaser Profile to pique their interest and follow up with them to determine if they are viable potential buyers. The confidentiality of your business is maintained throughout this process as the Teaser Profile does not disclose the identity of your company.

The process is as follows:

  1. Research & Compile the List
    1. Seller sends a list of potential buyers to Morgan & Westfield.
    2. Morgan & Westfield researches additional potential buyers and sends the list to the seller for approval.
    3. Morgan & Westfield researches and compiles a spreadsheet of potential buyers’ contact information.
  2. Initial Outreach & Follow-Up
    1. Morgan & Westfield sends the Teaser Profile to the potential buyers through multiple channels and requests that the buyers sign a non-disclosure agreement (NDA) if they would like additional information on the company.
    2. Morgan & Westfield follows up with buyers who don’t respond to the initial outreach using multiple contact methods.
  3. Buyers Sign the NDA & Receive the CIM: Morgan & Westfield emails the CIM to the buyer and answers any questions the buyer may have about the business.
  4. Negotiate Letter of Intent (LOI): Morgan & Westfield negotiates with buyers interested in submitting a Letter of Intent.

Preparing the List

Do I need to prepare a list of buyers? It’s helpful if you prepare a preliminary list of companies you believe may be suitable candidates. We can then expand the list and research contact information for any companies you have provided or we have discovered.

How large does the list need to be? The preferred size of the list depends on the type of business and industry. An ideal roster should include at least 50 to 100 names. Smaller lists may sometimes be sufficient if the interest level of the names on the list is high or if the companies have aggressively pursued you in the past.

How can I prepare a list of potential acquirers for my business? We suggest first researching direct competitors, then any indirect competitors, and finally any companies in related industries. If you decide to pursue a targeted campaign, we will initially discuss a strategy with you, including the types of companies we believe may be interested in acquiring you. Industry catalogs are also excellent resources for generating ideas for potential acquirers.

Is the process different from selling my business using other methods? Negotiating with competitors tends to be more rigorous. You should have your attorney on standby to manage revisions to the non-disclosure agreement, letter of intent, and purchase agreement, if necessary.

Targeted Marketing in Publications

An alternative to approaching buyers directly is marketing in publications such as trade magazines.

Here are the types of publications that might be suitable for marketing your business:

  • Trade publications
  • Other publications that target potential buyers for your business. For example, if you have a medical-related business, medical journals might be suitable.
  • Online blogs or forums
  • Any other publication whose readership consists of your target market


How much do most publications charge?

This varies considerably depending on the industry and the publication. Rates can range from as low as $50 to as much as thousands of dollars for highly targeted national publications.

Can this be combined with other marketing methods to sell my business?

Yes, we recommend marketing certain businesses using multiple methods.

Do you recommend marketing all businesses using targeted publications?

No, this strategy is generally only required for highly specialized businesses.

What kind of response can I expect to receive?

This varies greatly depending on the publication and its readership, so this is difficult, if not impossible, to predict.

How long should I advertise my business in these publications?

We suggest taking this one month at a time, adjusting your strategy based on the response.