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When you start the search phase, success rarely comes overnight. The process of finding and acquiring the right business can be long (generally around 20 months according to the Stanford Study), challenging, and, many times, very frustrating. Deals fall through, potential leads disappear, sellers change their minds, unforeseen legal or financial issues may arise during due diligence, disagreements with the seller on valuation occur, and the path to your goal can seem elusive. Success in this arena is no easy feat. However, two qualities consistently prove essential and can make a difference for SF entrepreneurs: resilience in the face of setbacks and the ability to build lasting relationships.
Resilience: the fuel for longevity
Searchers often describe their journey as a “grind,” and it’s an apt description. The search process is riddled with obstacles, from identifying potential opportunities to negotiating terms and securing financing. Rejection is the most common theme at the beginning of the journey, and you need to manage it. Moreover, it’s not uncommon for deals to fall apart at the last minute, leaving the searcher disheartened and back to square one. In moments like these, resilience is the key to staying the course.
Resilience means having the internal drive to keep pushing forward, even when it feels like nothing is working. Rather than becoming discouraged, you have to believe in yourself, keep going, use these experiences as learning opportunities, refine your approach, and explore new subsegments of industries for the next opportunity. Knowing you’re betting on yourself and that you have your investors’ trust can be a powerful motivator. This belief in one’s ability to eventually find the right deal is what sustains many searchers through the ups and downs.
Importantly, resilience doesn’t mean pushing through blindly: search is a marathon, not a sprint. Even if you are working with a limited budget and feeling the time pressure, you need to pace yourself, allowing time for breaks and reflection when necessary. Taking care of one’s mental and physical well-being ensures that searchers remain sharp, focused, and motivated over the long haul. A long search period also requires adaptability. Flexibility, combined with persistence, ensures that opportunities are not missed due to rigid thinking or burnout.
Building relationships: the foundation of success
While resilience keeps searchers moving forward, relationship-building is often what ultimately leads to success. In the lower middle market, deals are often driven by trust. Unlike large corporate M&A transactions, SF deals involve business owners who have spent years, sometimes decades, building their companies from the ground up. These owners aren’t just looking for the best financial offer—they want to sell their business to someone they trust, someone who will carry on their legacy.
This is where the ability to build and maintain strong relationships becomes crucial. You need to connect and show sellers that you’re the right person to take their business to the next level. For many of them, selling their company is an emotional decision, as it represents the culmination of years of hard work. Understanding their goals and addressing their concerns can create a smoother negotiation process. Sellers are often more willing to accept a deal if they believe the buyer is genuinely invested in the future of the business and its employees.
Furthermore, building relationships isn’t limited to potential sellers. Having a strong mentor network is just as important, as they offer invaluable guidance, help searchers avoid bad deals, and provide emotional support throughout the challenging process. Don’t forget to rely on and involve your investors. Open communication about the progress of the search, challenges faced, and potential opportunities fosters confidence and collaboration.
Balancing persistence with patience
In SFs, success is a blend of persistence, patience, and relationship-building. Searchers must persist through setbacks, keeping their eyes on the ultimate goal while taking the time to build trust with business owners and mentors alike. Deals often take longer than expected to close, and many times, the relationships you build today will pay dividends in the future. It’s key to have a smooth negotiation, where the seller will help you conclude the deal, providing you with a seller’s note in many cases, possibly re-investing in the newco, and facilitating the passing of the baton.
