A highly effective sourcing strategy involves building relationships with successful industry executives, not just company owners. These executives provide credibility, deep industry knowledge, and often bring specific, off-market companies they have relationships with and want to run post-acquisition.

While most PE firms avoid carve-outs due to perceived complexity, Transom actively seeks them. Their advantage comes from a specialized in-house team with repeatable processes, like a dedicated Project Management Office (PMO), that can execute these complex transactions efficiently, turning other firms' fears into a source of value.

A carve-out is not a simple asset transfer but the creation of a new, independent company. This process involves establishing entirely new IT, security, payroll, and benefits systems, which are often deeply entangled with the parent company's infrastructure and require significant time and resources to stand up.

A successful exit is a highly choreographed dance, not an abrupt decision. Founders should spend years building relationships with line-of-business leaders—not just Corp Dev—at potential acquiring companies. The goal is to 'incept' the idea of an acquisition long before it's needed.

With a PE-owned target, engage its leadership on operational partnership details while simultaneously discussing the long-term acquisition case and financial horizons with the PE owners. The Corp Dev leader must orchestrate these parallel, distinct conversations.

Approaching a business unit head to acquire their division is like "inviting the turkey to Christmas." They will naturally be defensive about their role and business. The correct strategy for a proactive approach is to engage their superiors, who have a broader strategic perspective on whether the unit is core to the parent company.

Founders who wait until they need to sell have already failed. A successful exit requires a multi-year 'background process' of building relationships. The key is to engage with SVPs and business unit leaders at potential acquirers—the people who will champion the deal internally—not just the Corp Dev team who merely execute transactions.

To make an acquisition pitch more compelling, Progress's Corp Dev team brings in the relevant General Manager (GM) to speak directly with the target's CEO. Hearing the vision from their potential future boss builds more excitement and trust than a pitch from the deal team alone.

To influence a deal, build direct, ongoing relationships with the VCs in your target sectors before a process starts. This pre-existing connection allows for frank, back-channel conversations about deal terms and stakeholder needs, which is impossible in a formal auction.