Building and maintaining seller and advisor relationships is a critical component of any buyer’s marketing strategy. For buyers of middle market companies, the challenge is not just to build a brand, but to ensure that your marketing message is targeting the right audience at the right time. Traditional methods of staying in front of business owners and advisors are becoming less effective. According to Nielsen, US Internet users spend 3x more minutes on blogs and social networks than on email. Also, the Center for Exhibition Industry Research’s (CEIR) 2010 Exhibition Industry and Future Outlook Index reports that the overall exhibition industry hit bottom in 2010. Advisors receive thousands of emails and solicitations weekly and are attending fewer events, all the while remaining focused on client development and marketing active deals. It’s more difficult than ever to break through the clutter.
Increasingly, online tools can help you stay connected with advisors and business owners at the moment they are considering raising capital or bringing a company to market. But as much as technology plays an important role in your outreach, little can replace the power of making direct, in-person connections. In fact, technology should be viewed not as a replacement for relationships, but as a tool that empowers you to create and develop the right ones.
Axial’s client development team uses a 3Ps strategy to connect and build relationships with entrepreneurs, M&A firms and other middle market participants. To aid in your efforts of improving, managing, and growing seller relationships using technology, we’ve outlined our 3Ps methodology so you can use it too:
1. Presence is about consistently and constantly being in front of sellers. One of the critical ways to improve the effectiveness of your marketing or seller relationship management is to actively manage your online presence through a high level of engagement. Advisors and entrepreneurs need to know you’re out there. You should be involved in social media, maintain a robust website, and participate in online networks where business owners and investment bankers are congregating. Platforms like LinkedIn are a great place to start, given the huge volume of members currently using the service, but are limited in providing you with the right signals that indicate a company is coming to market. Go beyond simply maintaining a corporate or personal profile and ensure your team has joined the right groups and associations within LinkedIn.
Online M&A platforms are advanced, specialized tools that help you connect with sellers of companies. Services like Axial are giving buyers the ability to market their expertise to engaged members. These dedicated platforms are often wrongly characterized as “deal aggregation sites.” In fact, they are networks of active buyers and sellers, using research and messaging tools to discover each other and then engage on relevant opportunities at the right time. Managing your identity on these platforms ensures you’re visible, “find-able” and “research-able” at the moments that an M&A professional is researching and preparing to engage prospective buyers.
2. Position refers to clearly articulating your investment thesis. Historically, advisors would send opportunities to hundreds of financial buyers and allow the process of reviewing the CIM and other materials be the filter which narrows the buyer list. Today they are doing things differently — they are doing more and more research online and up front. More demanding owners are looking for buyers that will add tremendous value post-acquisition. To be the partner of choice for business owners, buyers who convey their expertise in particular industries or verticals will win. Look at it from their perspective: they’ve spent at least 10 years building their company, in some cases multiple generations. They aren’t compelled to engage financial buyers who investment criteria is “everything under the sun between $2 million and $20 million of EBITDA with low customer concentration”.
Online M&A platforms allow you to articulate your investment thesis in different ways. Just as you would convey the value you can deliver to an owner in an in-person conversation, the Internet allows you to have many ongoing “conversations.” You can create an unlimited number of pages on your website, maintain multiple Transaction Profiles on Axial, and engage with many different LinkedIn groups or other online forums.
3. Process is the methodology by which you measure your online relationships and the deal flow that it leads to. It is critical to develop the appropriate metrics around the platforms, networks, and other online channels driving new relationships, deal flow, and ultimately closed deals. Over time, you can focus your attention on the channels that generate the most “yield” for your firm. Axial makes this easy with its analytics module, but Excel works just as well. Your process should measure how many new connections and conversations you have with deal flow sources, help you understand who’s viewing your profile, who’s relevant, how much is it costing you, etc.
Relationships drive M&A. Relationships are moving online, they’re no longer just offline. The nature by which relationships are formed, maintained, and cultivated is undergoing a transformative shift right now. Online networks create the ability to be present and visible in front of the right audience at the right time. Use them to create new relationships, re-kindle old relationships, articulate your company’s strategy and operational expertise and your deal pipeline will soar.