M&A isn’t an RFP process

DealMaking Intel #30

Hi, it’s Thomas from Positive Capital. I'm helping tech entrepreneurs increasing the odds and speed of an M&A transaction.

Deal Making Intel is an insider playbook about M&A Deal Making. Today, I'm sharing the common buying process of strategic buyers.

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Founders often approach M&A as a procurement exercise. The game plan typically looks like this:

• Targeting large, cash-rich corporates, assuming a $20–50 million acquisition is low-risk for them.

• Sending out structured information, believing that a well-run process over 3 to 6 months will create a bidding war.

• Waiting for bids, expecting buyers to evaluate the opportunity, quantify synergies, and shoot compelling offers.

Until they get punch in the face.

Actually, out of the 100 buyers contacted: 10 sign the NDA, 5 take first meetings with the Corp Dev team, 2 get to second meetings with an executive, who then:

• Frequently fail to honor commitments regarding follow-ups.

• Postpone meetings abruptly, often by several weeks.

• Disappear without explanation, only to resurface unexpectedly.

These founders learn the hard way that M&A is not a structured RFP process — it’s a complex, high-stakes B2B Sales game.

That’s why I’m doing my best to educate founders about how corporates really buy companies.

For corporates, there are two types of M&A:

• Enterprise combination: When the target provides an immediate, measurable contribution to the buyer’s operations within the current fiscal year. This typically means a 10%+ improvement in key financial metrics such as revenue or profit. These deals are driven by clear financial impact and are easier to justify internally.

• Entrepreneurial acquisition: When the target’s contribution to the buyer’s operations is mostly in the future. These acquisitions are viewed as investments rather than immediate value drivers, meaning the payoff is uncertain and long-term rather than immediate.

The decision-making process for these two types of acquisitions is quite different. Just like in enterprise sales, the best closers don’t just understand their customer’s needs, but also their customer’s buying process.

An Entrepreneurial Acquisition is considered High-Risk

When a large corporate evaluates a $20–50 million acquisition, it typically falls into the entrepreneurial acquisition category. This means the deal is inherently seen as risky because:

• It lacks immediate financial impact.

• The return on investment is uncertain and long-term.

• Internal decision-makers must justify the acquisition as a strategic bet rather than an immediate financial win.

For the deal to move forward, the first step is finding an internal sponsor — someone who will champion the deal and take responsibility for pushing it through.

The Role of the Sponsor: A High-Stakes Political Move

Founders often overlook the personal risk a sponsor takes when advocating for an acquisition. A sponsor is putting their career on the line by championing the deal:

• If the acquisition succeeds, they may gain recognition and influence.

• If the deal fails, they risk reputational damage and stalled career progression.

This is why political incentives matter more than financial projections. If there is no political upside for success and no political downside for inaction, the deal is at risk of falling into M&A limbo — where the buyer remains interested but never commits.

The Power of the Sponsor determines the Fate of the Deal

Not all sponsors are equal. The level of political influence a sponsor holds within the company directly impacts the likelihood of closing the deal.

• A deal sponsored by a VP carries more weight than one backed by a business unit leader.

• The higher the sponsor’s rank, the more internal buy-in they can secure.

• If the sponsor lacks political clout, the deal can get stalled in endless internal reviews.

In other words, the internal power dynamics of the buyer matter just as much as the financial rationale for the deal.

Competing for Resources: ROI Alone isn’t Enough

Even if your deal has a strong ROI, it still competes with dozens of other proposals sitting on the desks of corporate decision-makers. Large companies have limited capital and too many opportunities, so proving a positive ROI isn’t enough — you must stand out as an asymmetric risk.

How? By proving synergies before the acquisition happens.

• Show tangible proof of value that reduces the buyer’s perceived risk.

• Demonstrate real-world collaboration between your company and the buyer.

• Provide clear evidence that integration will be seamless and profitable.

M&A is 80% psychology, 20% finance. It often takes years of engagementbefore a corporate makes an offer. Because at the end of the day, companies aren’t sold, they are bought.

Thanks for reading!