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Private Equity

The Best (and Least Expensive) Business Development Tool for Private Equity


M&A is crowded and that’s not changing anytime soon. As a result, the quest for quality deal flow among sponsors and intermediaries is increasingly challenging and intensely competitive. Last summer, Pitchbook reported a 143% rise in active firms globally, with historic levels of dry powder only exacerbating the problem.

With so many firms competing to put capital to work (all of which are in the business of “quality” opportunities), deal sourcing will likely remain the acutest pain point across the industry for the foreseeable future.

For many, deal sourcing means becoming a regular participant at industry conferences, seemingly endless networking dinners and many rounds of speed dating with intermediaries.

While putting yourself out there to establish a presence and make connections will always be part of the program, many firms are missing the most powerful (and surprise… least expensive!) business development tool available. The good news…it’s a strategy available to all firms and likely on the desk of your nearest deal professional.

The secret? Effectively marketing your most recently closed deal.

[pull_right]Completed transactions are the most underutilized deal sourcing asset out there.[/pull_right] There is nothing that does a better job of telling the market — especially owners and operators — what you do and what you’re looking for than the deal you just closed. Unfortunately, most firms overlook this opportunity and fail to tell the right story to the right people.

Chances are, your current transaction marketing strategy looks something like this: write a press release (or get your on-retainer PR firm to write it), throw it on a newswire and hope the right outlets pick it up. You may announce it on your website or blast it out to your network, but even when that happens intermittently, it’s all too often clunky in its design and delivery.

Despite this being an unnecessarily expensive process, it’s also very ineffective for driving firm awareness and deal flow. Beyond being a tombstone on a tearsheet, the deal you just spent months closing is effectively dead from a marketing standpoint.

Traditional Press Releases Are Dead

Whether you call it PR, transaction marketing, or simply “spreading the word,” the goal is generally the same: generate attention for your firm by touting your big accomplishments. While it’s great to have the occasional media win to hang on the veritable office refrigerator, throwing a deal announcement on a newswire is largely pointless. Firms do it because it’s known and easy, but it rarely leads to actual media coverage, and certainly not in the outlets that can drive deal flow.

A strategic transaction announcement should analyze its audience in detail. While it varies by deal, here are the big three categories firms should care about:

  • Firm network: intermediaries, executives, investors, advisors, etc.
  • M&A community: news outlets that cover deal activity from various angles
  • Industry outlets: trade publications and news outlets owners, operators and executives read in that particular industry

In our experience, firms rarely target all three of these groups effectively. Many firms clear the bar on getting news out to their network, but don’t have processes or resources to effectively reach the other two, which are arguably more important for driving deal flow.

Focus first on audiences that matter to the business of the business. In other words, focus on people that lead to deals. PR firms often get away with using buzzword generalities like impressions, influencers, stakeholders, community when the talk about audience targeting (in an effort to justify all-too-often expensive retainers). Effective transaction marketing focuses on specific individuals, outlets and groups and uses tactics rooted in how the M&A industry actually operates.

The effort should be more “laser” than “shotgun.” Blasting as many people as possible and hoping that your news will catch the eye of someone that cares is not the answer. It’s always best to know what you’re looking for before you go hunting. For us, this means 1) a modern, seamless approach to communicating with your network, 2) a specific list of M&A outlets that command attention, and 3) a curated list of industry or sub-sector outlets that are hungry for deal news in their space (and that owners and operators actually read!).

4 Tips for the Modern Firm

Regardless of the types of deals you do or the role you play in the world of M&A (applies to both investors and advisors), keep the following in mind:

1. Newswires alone weren’t built for PE deal marketing:

Newswires were originally designed for publicly-traded companies to announce news and comply with Regulation Fair Disclosure. Yes, they are often the quickest way to reach as many media outlets as possible, but for deal marketing, they rarely get to the people you care about. Even when they do, reporters rarely have time to search for (let alone write about) your announcement. And, they’re expensive!

2. Relationships matter with outlets that matter:

The land of M&A reporting is not overly broad. There is a small handful of trusted, in-the-know outlets that most investment professionals turn to (think Fortune’s Term Sheet or Dan Primack’s new Pro Rata column on Axios). Conversely, the number of transactions is enormous. Hoping relevant reporters stumble across your press release and then write about it is very tough. The best way approach this is to build relationships and then communicate directly with them. If you use an outsourced provider, relationships like these are table stakes.

3. Go deep in your industry:

An effective transaction marketing program focuses at least equal effort on industry media outlets. M&A media outlets are useful for helping intermediaries know what you’re up to, but less useful for targeting owners and operators in sectors you play in (which can lead to highly coveted proprietary deal flow). Whether you invest in healthcare or light manufacturing, there are always trade magazines and niche media outlets that executives actually read. Having a highly targeted media relations effort here is key to being able to link your efforts back to overall deal flow.

4. Be thoughtful about the presentation:

Generally speaking, the M&A community could win an award for the ugliest email campaigns in the world!We aren’t suggesting deal announcements sent to a firm’s network need to be works of art, but being thoughtful about design can go a long way towards standing out. We see so many emails with long paragraphs of content in bad layouts that aren’t mobile-responsive (e.g., they don’t look good on your phone). These are pretty easy issues to solve for, but they often require a touch of pre-planning and some outside help from time to time.

Investors professionals and M&A advisors live in a crowded house…and there are more people moving in! Standing out to audiences that matter is increasingly valuable in a highly competitive market. Don’t get caught looking beyond the mark – your next deal is your biggest sourcing asset. A strategic deal marketing program will ensure that it matters, by generating greater firm awareness and the chance for more, high-quality deal flow.

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