Mastering the first owner call

Navigating initial conversations as a searcher

The first owner call can be a frightening experience to the newly-minted searcher, particularly those without a sales or sourcing background. With a heavy dose of imposter syndrome, we begin the search by defining and creating our sourcing process, eventually yielding a target list of opportunities we aim to contact.

Then, we go through the work to reach out to business owners directly via sales outreach tools, email, and maybe even phone calls. With enough velocity and the right approach to your outbound communications, you’ll land yourself with some introductory owner calls.

So, what do you do once you’ve found an owner willing to speak with you about selling their business? 

Today, I’ll walk through the significance of the first owner call in the journey of a search fund entrepreneur, particularly for those just starting out. These initial interactions bring a mix of anticipation and uncertainty that seem foreign to the searcher getting started but are part of the routine for the seasoned one. I hope to share my insights with you on the following:

• Deciding to engage or not in an introductory conversation

• Preparing for the calls

• Overcoming fear and anxiety

• Directing the conversation effectively

• Expectations vs. reality

• Other best practices

Deciding to engage

Time is the most important resource during your search. How you spend every waking moment dictates whether or not you will set yourself up for success in terms of completing an acquisition. When inbound emails come in from your outreach efforts, it’s important to decide quickly whether you should spend more time on a lead or pass. 

Too restrictive of a view may leave you empty-handed when all is said and done, while too loose of one may cause you to waste valuable time evaluating bad businesses or with business owners who have no intent of selling to you.

I recommend focusing your time on those interested in and actively considering selling their business. Those who are simply exploring the idea of selling may be good contacts to build relationships with over time throughout your search, but they are not your priority. Equally, I’d advise you against spending considerable time with business owners who have no interest in selling unless you’re looking for industry knowledge. Even then, I’d be cautious, as one person’s viewpoint is not necessarily the right one regarding a specific industry.

What you are solving for here is to get yourself out of what I’ll call ‘Maybe Land’ as soon as possible. A firm ‘No’ is always better than a ‘Maybe,’ so be careful of getting caught in the trap of thinking you can influence an owner to sell their business when they haven’t seriously considered doing so. This doesn’t mean you should not engage with them over the long run, but these should not be conversations where you’re mostly spending your time.

Each searcher has minimum investment criteria they look for in their ideal acquisition target, but I recommend also establishing separate criteria that serve as the gating mechanism for taking that first owner call. An example of this criteria would be the following:

• The owner expressed interest in selling their business

• Business is in the industry vertical I am targeting

• Business appears to be of EBITDA size based on LinkedIn data or owner disclosure

If one of these fails the test for whatever reason, it may make sense to respectfully decline conversation with the owner out of respect for their time. In addition, with the right context, consider pointing the owner to your marketing website or sharing a brochure that clearly defines what you are looking to achieve. You obviously don’t want to come across as too transactional, but at the same time, you need to be smart with your most valuable resource: time.

You may be asking yourself, “Why would I have businesses in the wrong industry vertical or too small?” You’ll find quickly that data quality on private companies at this size is not optimal. And secondly, if you’re leveraging a team of interns to create scale for your search activities, there will naturally be some leakage of companies that are outside of your criteria that make it into your outreach campaigns. You want to minimize this as much as possible, and this topic alone warrants a separate post.

Preparing for the call

Now, let’s assume that you’ve done some early screening and you’ve made the decision to set up a call with the business owner. How should you prepare?

First, it’s worth mentioning that you should be taking full responsibility for scheduling the conversation and making sure the experience is seamless and convenient for them. Do what you can to accommodate their needs and schedule, and remember that each call with be situation-dependent. Here are some tips that I recommend:

• Suggest specific dates and time ranges rather than simply posting a Calendly link. It’s more personal, and you can use your Calendly if those stated times don’t work for the owner.

• When feasible, opt towards video calls over phone calls. The reality is that owners will simply join via audio if they don’t want to have a video chat, and you can always opt to turn your camera off afterwards. While it doesn’t beat in-person meetings, it is a great way to slowly begin building a personal connection with them.

• Ensure you have a quiet environment and stable internet connection to take the call in. If you must take the call in a coworking space or cafe where there is background noise, use the audio noise-suppressing functionality built into most video conferencing software.

• Invest in a good camera and pair of headphones to improve the quality of your first impressions.

• Write out your talk track before hopping on the call, prioritizing your Qualifying conversations.

Overcoming call jitters

It’d be unfair not to acknowledge the common feelings of hesitancy or anxiety that can come with these calls, especially in the early stages of your search fund journey. On the one hand, you may worry that an owner will call you a fraud; on the other, you may have lost some interest in the business leading up to the call. These worries are normal and especially elevated in the first few months of the search.

The great news is that these emotions can be managed through repetition and preparation. Leading up to the call, spend 30 minutes familiarizing yourself with the business – how it makes money, who are its customers, and how it fits into your search thesis. This will refresh your memory for the call and give you more confidence to speak knowledgeably about the company and industry, along with why you were interested in the first place.

The following steps prior to a call will ease your nerves and enable you to manage these feelings during the conversation:

• Review basic information about the company via its website and Google search results

• Review the background of the business owner and the history of the company (if available)

• Take a quick bathroom break

• Approach the conversation with a growth mindset and positive attitude

• Avoid doom-scrolling on your social media platform of choice

• Take a few minutes to focus on your breathing – a short meditation can help

After getting into the swing of conducting initial owner calls, they’ll come more naturally to you, and you’ll find ways to prepare properly without spending too much time beforehand. The key is to begin having these as early as you can in your search, certainly within the first month.

Directing the conversation

We’ve made it to the conversation! Going in, I cannot stress enough the importance of entering the call with a clear objective in mind and a set of qualifying questions that are tailored to the business and your current knowledge of it. This call should not be led by the business owner but by you. Owners are kind enough to take time out of their day to speak with you, so you disrespect them by not coming ready and prepared.

This does not mean that you should be blabbering during the call, talking about your business school degree or why you know so much about ABC industry. It does mean that your role is to manage the speed and flow of the conversation – keeping the discussion on track, getting to know the owner, fielding questions as they come through, etc.

While you’ll have your qualifying questions as a guide, I advise you to avoid being overly prescriptive and reliant on your notes. These conversations can go all over the place, and there’s no place during these calls to be staring down at your desk and scribbling in your notebook. Most importantly, you are trying to get to know someone, not transcribe the meeting.

Being present during the call will keep the flow of conversation and allow you to adapt your tactics as things unfold. This may mean extending it past the scheduled time when the conversation goes well or nudging the owner to get back on track after a series of digressions. It could also mean respectfully acknowledging there’s not a mutual fit and shortening the call entirely.

Expectations vs. reality

Often, there's a misconception among new searchers that owner calls are filled with hostility. The fear and anxiety of being reprimanded or labeled as an 'idiot' can seem overwhelming. However, the reality is generally more benign and often quite pleasant. In my experience, the vast majority of conversations with business owners are constructive and enlightening, even when there isn't a fit. There’s always something to learn from them.

Most business owners genuinely appreciate the interest in their life's work, and learning more about their journeys is quite interesting. These discussions can be eye-opening as you learn about their motivations in both business and life. If you find your calls are consistently going sour, though, revisiting the fundamentals of human interaction, as taught in "How to Win Friends and Influence People" by Dale Carnegie, is recommended. This book underscores the power of kindness and understanding, even in business interactions.

To illustrate the rarity of negative experiences, let me share a personal anecdote. Last fall, I encountered an atypical situation during a call. The owner, right off the bat, accused me of being a "fake entrepreneur," harshly critiquing my lack of building anything meaningful. Let’s just say that’s not a way to sell your business.

Faced with how to respond, I opted to not internalize his criticism. Instead, I calmly acknowledged his viewpoint without getting defensive. I concluded the call quickly and respectfully, wishing him well despite the hostility. This encounter, although jarring, served as a powerful reminder: such negative experiences are exceptional, not the norm. They also provide valuable lessons in maintaining composure and not taking undue criticism to heart.

Our journey in search fund entrepreneurship can often be misunderstood. It's crucial to remember that what truly matters is our own understanding of our path and our commitment to it, not what some angry business owner thinks. Instances like these, while rare, can be profound in teaching patience and resilience. They remind us of the importance of responding with grace, even when faced with unwarranted hostility.

You never know what struggles someone else is going through.

Other best practices for effective calls

Conducting effective calls is as much about the flow of conversation as it is about the content. Ensure there's a buffer in your schedule post-call to take proper notes of the conversation. Also, if a call is progressing well, this extra time allows you to delve deeper without the pressure of an impending engagement.

Respect, honesty, and transparency are your North Stars during these calls. And while follow-up might not always be crucial, it is always contingent on the call's outcome. If you commit to follow-up, do so promptly and with the right materials. If a six-month check-in is more appropriate, set that reminder immediately post-call. And if no follow-up is needed, that's perfectly fine, too. Each call is unique, and your follow-up strategy should be tailored accordingly.

Concluding thoughts

Embrace these early calls as critical learning opportunities. Each conversation is a chance to refine your approach, learn more about different industries and business models, and hone your communication and relationship-building skills. Keep an open mind and be prepared to adapt based on the insights and feedback you receive.