Each year when Q4 approaches, we start to hear one question above all others – ‘Should we stop our origination efforts over the holidays?’. We believe the short answer is ‘No’. While the holidays can take a few sourcing days off the calendar, we believe there are a number of compelling reasons to keep sourcing diligently through Q4, a few of these are listed below:
We do see a decrease in outbound origination efforts from PE firms as the year winds down. With so many firms and funds creating so much noise in the middle market, we believe there is an opportunity for your voice to be heard when others are silent. As is the case with most marketing initiatives, if your competitors pull back, you have an opportunity to push forward. This can lead to increased conversion and response rates at times that are otherwise seen as quiet or slow.
One of the biggest struggles we all face is finding real sellers. The holiday seasons and year-end, in general, tend to allow for business owners to enjoy some much-needed downtime. This time on vacation or with family lends itself nicely to thinking about long-term, big picture plans like a business sale. While it is hard to convince an unwilling seller to sell, approaching an owner considering a sale at this time in his or her thought process can be beneficial to conversion rates.
It seems like every buyer is waiting on a seller to update financials or close the books. By starting a conversation before year end you can have much of the initial interaction/assessment out of the way prior to closing the year. This allows your firm to be first in line to receive information and allows you to avoid to slump in post new year motivation and owners return from holiday.
If you are running some sort of origination process today, you should be running one tomorrow. Starting and stopping origination is like skipping days at the gym, it kills gains long-term. If you have a seller audience primed and open to a conversation with your firm you should continue pressing through the process regardless of the time of year – building that momentum costs money and it can dwindle quickly if ignored.
Running an effective CAPTARGET origination program is already inexpensive. Continuing sourcing for a month where owners may be out of the office for a week or two should create more value than it saves.