M&A Deal sourcing is a long game. With transactions often taking years to materialize, you need a solid strategy to stay the course. Let’s break down an easy-to-remember framework called TONS that will help you source more deals effectively.
T – Target
The first step is targeting the right companies—specifically those that will be ready for a transaction in the next five years. This means:
- Looking at companies that aren’t necessarily ready right now
- Aligning with your firm’s investment thesis
- Considering both core industry players and adjacent sectors
- Recognizing that companies may pivot their direction over time
O – Outreach
Successful deal sourcing requires a multi-channel approach to outreach:
- Cold calling
- Email campaigns
- LinkedIn messaging
- Other firm-approved communication methods
Your primary goals should be to:
- Connect with at least one decision-maker
- Gradually meet all key decision-makers
- Follow your firm’s communication policies
N – Nurture
With deals taking 3-5 years to mature, relationship nurturing is crucial. Key considerations include:
- Maintaining consistent contact (3-6 times per year)
- Using a CRM system to track relationships
- Ensuring continuity if team members change
- Staying top-of-mind amid competing advisors and investors
- Providing value with each contact point
S – Support
To become a trusted advisor, you need to offer real support before any transaction occurs. While specific support will vary by business, remember this: merely advertising that you have capital isn’t enough—thousands of others can say the same thing.
Building Trust Through Action
As recommended in “The Speed of Trust,” the best way to earn a business owner’s trust is through:
- Demonstrating trustworthiness
- Providing tangible support early
- Contributing to business growth
- Being consistently present
While this approach doesn’t guarantee you’ll win the deal, it significantly increases your chances of being at the table when the opportunity arises.
The Long View
Remember, M&A deal sourcing is about playing the long game. The TONS framework helps you stay focused and systematic in your approach, ensuring you’re building the right relationships with the right companies in the right way.
By following this framework—Target, Outreach, Nurture, and Support—you create a structured approach to deal sourcing that can deliver results over time. The key is consistency and genuine value creation throughout the relationship-building process.