In the arena of private companies (closely-held family-owned corporates) looking to acquire other private companies in an unrelated new vertical (as a diversification strategy), how risky or advisable it would be to go about the target search by formally engaging a professional corporate M&A Advisor ? Instead, would such an acquisitive search done more informally through the existing network of suppliers & customers and referrals be more advisable and rewarding ?
The background to this specific query is based on the reservations or apprehensions of the acquiring private company to consummate a deal with a totally unknown private company, more so engaged in a different vertical and operating in another country / continent, without building the much needed acquaintance and getting-to-know the target company. On a lighter note, the question is somewhat similar to asking – should we opt for the process which is adopted in case of a ‘arranged marriage’ or the one adopted in case of a ‘love marriage’
My point of view is that it is always better to be introduced by someone who knows the company and the owners. As a complete stranger, it can take quite sometime to build trust which is a key component in convincing the owner to sell to you.