I like this post on what filling up the deal-flow pipeline for VCs looks like. For example, a good bozo bit heuristic:
One of the reasons that a meeting doesn’t go well is that the founding team will say they expect $50 million in revenue in 5 years, but they have difficulty articulating how they’ll get to their first $1million.
Having worked on the buy side of the table (when I was in corporate strategy, working on M&A for software and cloud at Dell), there’s a similar story for what the exit looks like.
When you’re on the buyer side of the table, you see an equally large number of pitches, but also from investment bankers (i-bankers) with their fancy banker books. They try to reverse engineer what your strategy is (briefly: what your motivations, hopes and dreams are [hopefully revenue!]…your criteria for buying companies) and present a good analysis and story for companies you should buy.
Companies themselves visit you a lot and pitch everything from partnerships, to investing in them, to the allusion of being bought. It’s sort of funny, very rarely does a company ever come to you and say: you should buy me!
Just as with VCs, because of the high volume of incoming meeting requests, you develop a set of criteria for bozo bitting companies, fair or not.
The whole process is an annoying poker like process where each side is trying to bluff about how much it’s bluffing. In theory, the numbers your shown are good and genuine - but that all mostly relies on trust based on relationships and body language, early one, before lawyers and fine print gets involved.
Anyhow, one day I hope to write-up more deeply what it’s like being on the buy side of the table: that really doesn’t get addressed enough. There’s lots, and lots of bonkers stories and principals to extract.