Mergers and Acquisitions (M&A deal sourcing) is a long game. Deals can take years to come to fruition, so having a solid strategy is essential for staying relevant in a fast-paced, competitive market. A simple acronym to guide you through this process is TONS, which stands for Target, Outreach, Nurture, and Support. Let’s break down how to apply this strategy effectively.
1. Target
The first step in the TONS framework is targeting the right companies. You need to focus on businesses that will be ready for acquisition in the next five years. This means they might not be ready today, but by aligning with your firm’s thesis, you can identify potential targets in relevant industries or adjacent sectors. Keep in mind that companies evolve and pivot, so it’s crucial to understand not only their current focus but also where they might be headed.
Think long-term. If you’re identifying businesses that are on track for acquisition years down the line, you’ve got to position yourself early. Timing is key.
2. Outreach
Once you’ve identified your targets, the next step is outreach. In today’s digital world, M&A outreach can’t rely on just one method—cold calling alone won’t cut it. Use a multi-channel approach that includes email outreach, LinkedIn messaging, and other strategies approved by your firm.
The goal of outreach is to connect with at least one key decision-maker in the target company. Once you’ve done that, try to meet all the other decision-makers involved in a future sale. The more stakeholders you engage, the better your chances of staying top-of-mind when the time for acquisition comes.
3. Nurture
M&A deals take time, so nurturing relationships is critical. If a company is planning to sell within three to five years, you need to maintain regular contact over that entire period. Staying in touch ensures you remain in the decision-makers’ minds when they are ready to move forward with an acquisition.
How often should you reach out? A good rule of thumb is three to six times per year. The goal is to provide value without being intrusive. Offer insights, share relevant market news, or provide business tips that align with their goals. You want to avoid being forgotten or replaced by another potential buyer during this long-term process. A reliable Customer Relationship Management (CRM) system will help you manage these contacts and track touchpoints, so you don’t lose momentum—even if someone else needs to take over your role.
4. Support
The final piece of the TONS strategy is support. To become a trusted partner, you need to provide meaningful assistance long before any acquisition discussions start. Simply offering to invest or stating that you have capital available won’t differentiate you from countless other firms.
Real support can vary depending on the business. It might involve offering strategic advice, helping the company grow, or connecting them with resources that will improve their value in the long run. Building trust is critical here. By positioning yourself as a valuable ally rather than just another potential investor, you improve your chances of being the first option when the opportunity to invest arises.
In Stephen M.R. Covey’s book The Speed of Trust, trust is the cornerstone of any successful business relationship. Being trustworthy and consistently providing value over time will set you apart from the competition and create lasting partnerships that can lead to successful acquisitions.
Final Thoughts
The TONS strategy—Target, Outreach, Nurture, Support—is a comprehensive yet straightforward way to improve your M&A deal sourcing efforts. By thinking long-term, staying in regular contact, and building trust through valuable support, you’ll increase your chances of being the first choice when the time comes for a business to sell.
Take this strategy, apply it to your current deal sourcing efforts, and see the difference it makes in building stronger relationships and securing more opportunities.
Book Recommendation
Try reading The Introvert’s Edge to Networking: Work the Room. Leverage Social Media. Develop Powerful Connections. It’s a great read on helping you build better relationships.
For other reads:
