Search Strategies and Market Approach – How to Find Your Target Company

Your personal and professional network is not merely a door-opener — it is often the decisive success factor when searching for a business to acquire. Studies and first-hand accounts confirm that a significant proportion of successful business acquisitions can be attributed to recommendations, confidential leads, and personal connections.

Why is the network so valuable?

Many business owners who are considering a sale wish to maintain discretion and avoid putting their company on the open market. They prefer to confide in people who have been recommended to them through mutual contacts, or who are already well known within their industry. A network therefore acts as a "trust filter", providing access to so-called "off-market deals" that never appear on platforms or with brokers.

How do you achieve activation?

• Start with clear, authentic communication about your plans within your network. Make use of opportunities such as industry events, alumni gatherings, professional forums, entrepreneur meetups, and LinkedIn posts to signal your interest in acquiring a business.
• Reach out specifically to people who can act as multipliers – such as tax advisors, auditors, former business partners, industry experts, or ex-colleagues who now hold key positions.
• Actively ask your network for referrals and signal discretion and professionalism. Many contacts will only be willing to share sensitive information after several conversations.

Practical tip:

Successful searchers in the search fund space report generating up to 40% of their deals through network activation – and that these deals are often particularly attractive because they involve less competition and greater room for negotiation.

Strengths of the platforms:

• Transparency: You gain an overview of current offering structures, price levels, industries, and regions.
• Efficiency: Search filters enable targeted pre-selection by size, industry, location, turnover, and other criteria.
• Initial contact: The platforms allow you to quickly get in touch with sellers or their advisors and obtain initial information.

Limitations and Challenges:

• The most attractive businesses rarely appear on public marketplaces, as many sellers prefer discretion.
• The available opportunities are often highly competitive – particularly from financial investors or experienced MBI candidates – which can lead to higher prices and reduced negotiating power.
• The quality of information varies considerably; detailed financial data is often missing, or sellers float trial balloons to gauge market value.

Recommendation:

Use platforms as a strategic tool: for benchmarking, identifying industry trends, and as an early-warning system for new market movements. Always combine platform searches with network activation and direct outreach.

Bonus tip:

Many experienced buyers monitor platforms for months to identify patterns – such as which businesses have been on the market for a long time, which sell quickly, and which industries are in particularly high demand.

M&A advisors and business brokers provide access to exclusive opportunities and guide you through the entire acquisition process – from identifying targets and conducting valuations through to leading negotiations. Their particular value lies in structuring complex processes and facilitating professional dialogue between buyer and seller.

Services offered:

• Access to an exclusive portfolio of businesses that are frequently not publicly listed.
• Support with due diligence, business valuation, and contract drafting.
• Support with financing and communication with banks or investors.

Important notes:

• Brokers and advisors typically act on behalf of the seller or work on a success-based commission. Their interests are therefore not always aligned with those of the buyer.
• It is advisable to scrutinise offers and valuations critically and, where appropriate, to engage an independent adviser to represent the buyer's interests.

Best Practice:

In the international search fund environment, broker contacts are primarily used to gain access to exclusive – though sometimes more expensive – deals. Success rates improve when searchers remain proactive, nurture their own networks, and treat brokers as a complementary channel rather than a primary one.

Practical example:

A study by Stanford Graduate School of Business shows that buyers who rely exclusively on brokers tend to pay higher purchase prices and close fewer exclusive deals.

Strategic approach:

• Define your search profile clearly: Which industries, company sizes, regions, and business models are you considering? Which financial and operational metrics are central to your requirements?
• Identify potential target companies through industry directories, trade registers, trade fairs, associations, LinkedIn, or referrals from your network.
• Develop a personalised, respectful approach – ideally in person or by phone, as emails often go unopened or are perceived as spam.
• Communicate your interest openly, yet discreetly. Show appreciation for the entrepreneur's life's work and offer a clear perspective on how the business will be carried forward.

Success factors:

• Persistence: It often takes multiple attempts and many touchpoints before a conversation comes about. According to a Stanford study, an average of 20–30 initial contacts lead to a serious negotiation.
• Preparation: The better you understand the industry and your target company, the more willing entrepreneurs will be to speak with you.
• Reliability: Honour your commitments and nurture relationships over the long term, even if an initial conversation does not lead to a deal straight away.

Practical example:

In the Search Fund model, direct outreach is the cornerstone of the deal sourcing process. Successful searchers report that up to 70% of their deals are generated through proactive, personal outreach.

Find out what to look for when evaluating individual companies in detail in our article "What makes a good target company".

How it works:

• One or more searchers ("Entrepreneurs in Residence") raise capital from experienced investors to fund the search for a suitable business – including salary, travel expenses, and due diligence.
• The search is conducted systematically and data-driven across all channels: network, direct outreach, brokers, platforms.
• Investors bring not only capital, but also industry expertise, mentoring, and access to further contacts.
• After a successful acquisition, the investors join as shareholders, while the searcher takes on the operational leadership.

Success rate and key features:

• Successful searchers are characterised by strong self-motivation, discipline, excellent communication skills, and a clear focus on profitable, scalable business models.
• The model is particularly well suited to candidates who are ready to work in a systematic and entrepreneurial way, and who want to benefit from the experience and network of their investors.

Strategic advantages:

• Access to "hidden champions" and exclusive deals through professional, structured outreach.
• Support and sparring from experienced entrepreneurs and investors throughout the entire search and acquisition phase.
• Financial security and greater leverage in negotiations and purchase price financing.

Disadvantages:

• Highly restricted target group: The classic search fund model is primarily aimed at candidates with an excellent academic and professional background – typically MBAs in their early to mid-thirties with experience in consulting, investment banking, or a corporate environment. Investors show a clear preference for this target group, as it has historically proven to be particularly successful and is considered to have strong development potential.

• Limited flexibility in candidate selection: Investors are generally reluctant to deviate from this established profile. As a result, older candidates, purely hands-on practitioners, or career changers without an MBA find it significantly harder to secure support – even when they would be entrepreneurially well suited.
• Loss of autonomy: Bringing in professional investors comes with co-determination rights, control mechanisms, and reporting obligations. This limits entrepreneurial freedom.
• Increased pressure to succeed and time constraints: The search phase is typically limited to two years. This creates time pressure and can lead to compromises being made due to a lack of suitable targets.
• Reduced personal ownership stake: After the acquisition, investors become shareholders in the business. As a result, your own share of the company will be smaller than in self-funded or independently structured takeovers.

Finding the right business to acquire demands a professional, multi-track strategy. Combining network activation, digital screening, broker contacts, proactive direct outreach, and – for ambitious buyers – the Search Fund approach significantly increases your chances of securing exclusive, well-matched, and sustainable deals.

What matters is using all channels in parallel with a clear focus, keeping your own goals firmly in sight, and maintaining a systematic presence in the market. Your search strategy should always be grounded in a clear investment thesis. At the same time, you should keep the financial parameters in mind – in particular the costs involved in acquiring a business – and support your search with a well-founded business valuation.

A complete overview of all steps is provided in our business acquisition checklist.