Secret Banker: ‘Buyer Naming Strategy’ S1/Pt.3

In the previous episode, an ex-banker recalled how a happy accident in the Q&A process unintentionally drove competitive tension during a single-buyer deal. Now he shares why purposefully naming a buyer group is vital to every transaction.

16 July 2019

One of the challenging aspects of being on the buyside in a competitive process is not knowing how many other parties are involved in the deal. If you’re the only buyer, you know you’re in a position of strength, and the likelihood of collecting your fee looks significantly better. However, in a competitive process with 10+ buyers, how much is your client actually willing to pay? After all, no win, no fee.

Back in the day I was lucky enough to be at the sharp end of a deal where I was responsible for setting up the buyer groups. But what code to use? A nice, simple alphabet naming convention: Buyer A, Buyer B and Buyer C? A simplistic numerical system: Buyer 1, Buyer 2 and Buyer 3?

In the grand scheme of things does it really matter at 2 am on a Saturday with a looming 9 am Monday deadline? Well, the convention may not matter but the bidder’s placement certainly does. If Buyer 3 is called “Buyer 3,” then they’re going to assume there are at least two other potential acquirers. Why give away such valuable information? Big mistake!

No matter what naming convention you use, be smart about it. Make everyone assume they’re not the top bidder. If you opt for alphabetical, start at Buyer Group F. Numerical? Start at Buyer Group 6. Alternatively, opt for a non-chronological naming convention like colors, tube/metro/subway stops or, my personal favorite, the surnames of the players of the greatest football team of all-time.

Remember, it’s often the small details that turn a deal in your favor.

Check out the entire Dark Arts series:

Episode 1: How to Use the Index for Good & Evil

Episode 2: Happy Accident

Get a project name for your next M&A deal right now!

Stay IN the know

Sign up for our newsletter for must-read market analysis and thought leadership, delivered right to your inbox.