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Advisors, Private Equity

How to Combine Social Media and Traditional Deal Sourcing for Maximum Results


Combining traditional deal flow sourcing with social media and content marketing can help middle market dealmakers more effectively connect to key audiences, including C-suite executives.

“Social selling” can augment traditional deal sourcing methods.

“Social selling” as HubSpot details, has “become a crucial way for successful sales teams to communicate with their prospects.” Social selling “is when salespeople use social media to interact directly with their prospects.”

For middle market deal professionals, content marketing in particular can be a game-changer. Dealmakers can both attract inbound inquiries from firm blogs as well as utilize those articles in outbound origination efforts via email and telephone. So instead of cold calling prospects, dealmakers can share custom tailored articles made for the audience they’re contacting – in order to secure an interest in further conversations. And by publishing articles on socially shareable blogs and distributing them across major social media channels, inbound inquires will also increase.

These efforts require that firms dedicate themselves to publishing regular, authoritative articles of unique appeal to key audiences and establishing and maintaining a strategic social media presence.  To date, these efforts have only been adopted by a minority of middle market firms. However, statistics reflect an increasing acceptance of digital publishing as a means by which to reach target audiences. In 2007 for example, 16% of companies used blogs for marketing. By 2012, that figure had jumped to 43%.

Deal origination should be proactive.

David Teten, a Partner in New York’s ff Venture Capital, outlines 5 Best Practices in Sourcing Investments which is instructive for dealmakers seeking to generate more and higher quality deal flow in the internet age, of which social media is an integral component.

Specifically, Teten details how dealmakers that employ a “proactive origination strategy” achieve a higher number and higher quality of deal flow.  He notes that more dealmakers are hiring dedicated deal origination professionals to secure more proprietary deal flow.

Teten’s recommendations to improve both volume and relevance in deal flow are:

  1. Build a specialized outbound origination program.
  2. Create opportunities, instead of waiting for opportunities to appear.
  3. Use deal signals to look for targets which are both attractive investments and are likely to welcome an outside investor.
  4. Leverage social media.
  5. Install an appropriate Customer Relationship Management [CRM] tool.

Practically speaking, middle market advisors can create a custom outbound origination program utilizing custom articles and social media promotion on a firm blog, a firm Twitter account and email marketing — where both dedicated professionals as well as firm dealmakers participate. For example, instead of cold calling a prospect, send a well-researched article to pre-selected audience via email first as a means to determine initial interest.

Some dealmakers are already aggressively utilizing social media to increase deal flow.

In the past, dealmakers tended to keep their deal flow sourcing discreet, as Teten details. However, today, he notes that between 10 and 15% of “1,000 active venture capitalists blog,” citing Heff Bussgang of Flybridge Capital Partners.

These investors, Teten notes, “have found that openly discussing their investment [criterion] increases their perceived expertise and trustworthiness, and this generates dealflow.” He notes, however, that private equity funds have been slow to adopt social media, while a few have been more aggressive. In particular, he cites HealthPoint Capital, “a $750m fund, that “has made their blog a destination for M&A/investing information in the musculoskeletal sector – specifically orthopedics and dental.”

Among those middle market-focused investment banking firms that are currently publishing are Allegiance Capital Corporation of Dallas, Texas, and Corporate Finance Associates of Laguna Hills, California.

Social media channels like Twitter, utilized by businesses around the world, can be utilized both to identify potential sources of deal flow as well as a means by which to disseminate articles as a part of the social selling process. CRM systems can also be used to more effectively organize this data.

As the internet becomes more central to business communications, a well thought out and properly implemented social selling effort, inspired by best practices in modern deal origination, will help dealmakers achieve more and higher quality deal flow.

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