4 deal origination email mistakes Private Equity firms should avoid

September 22, 2016

Deal Origination online is tricky.

You find a company that at face value could be a great acquisition candidate, so you cold email them…

…and you never hear anything back.

If this sounds familiar to you, then you may want to change the way you reach out to target companies.

The chances are that your emails both end up in trash folders and that the target starts to associate your firm with spam – never a good thing!

Low conversion or response rates are one thing, but a negative impact on your firm’s reputation is another. Below we cover 4 easily correctable cold emailing mistakes that will improve your online origination effort:

#1 Your emails are generic

There is nothing wrong with using a templated approach to outbound emails.  Templates can speed up your process, minimize errors and allow you to lever what works best after testing various approaches. 

For all the good a template can provide, there is plenty of bad.  Templates fail to build an emotional connection (and trust!).  Imagine yourself using a script on a phone call, it wouldn’t sound right – templated emails can feel the same way. 

For an email to work you need to show the target that you have done your homework on their business. Response rates increase when you can prove you have invested time learning about the target prior to drafting your email. 

So how do you lever a template for speed and efficiency without sounding like a robot? Here is how…

Template all the generic parts of your email.  Information about your firm, your position, your mandate all should not have to change on a target by target basis, but write the rest specific to the target.  This way the message sounds natural without requiring you to rewrite every email from scratch.  Merge tags for industry, geography etc. go a long way in personalizing emails at scale. 

#2 Your emails are too long

Here is where your needs and the needs of your target may differ.  You want to tell them everything there is to know about your firm, your investment focus etc.  The target may only have a few seconds in their busy day as a business owner to absorb your message.  They just need enough information to get them to self-identify as being interested in speaking to you….that’s it. 

We recommend no more than 3 paragraphs of content in any Private Equity type origination email. These 3 paragraphs should include:

Introduction of both you the individual (this is important!) and your firm.

Clear information on why you are reaching out – be straight forward.

Call to action – don’t waste anyone’s time, including your own!

#3 You assume credibility

Regardless of fit, in the end, most response rates are driven significantly by trust.  If you fail to quickly communicate why you are credible, you may never end up speaking to the target.  

In Private Equity, money does not necessarily equal trust.  There are more than 12,000 active funds with some middle market presence, most of whom have some capital to deploy. That said, be prepared to qualify not only why you are experienced, but why you should be trusted early on in any communication.  

Consider doing the following to encourage trust:

Mention current portfolio companies – if you are focused on a single vertical, they may know someone you already work with.

Highlight achievements, awards, publications etc.

List prominent partners or team members – this personalizes the ask and increases the chance that someone they know, knows you.

#4 You use too many links

Many Private Equity firms like to reference links to portfolio pages, bios and other websites to share as much information as possible without creating a long content block via email.  Philosophically this is not a bad thing – more information is better, especially if you can keep your email short while sharing information, but most mail servers feel otherwise. 

Embedding links, even valid links to your website (for example) drastically decrease deliverability rates and increases the chance that your email gets flagged as spam.  As a rule of thumb, try to include only one outside link in your email.  Ideally, this link will be to your home page and linked to in the signature line, rather than in the main email text. 

Here is our call to action…

We would be remiss to not remind you that we are in the business of generating deal flow for our Private Equity clients.  Over the years we have found thousands of targets for hundreds of private equity firms big and small.  If you need help improving your sourcing efforts – contact us, we are here to help!