No matter the size of your firm, there’s sure to be many moving pieces to many different deals at any given time. With the rush to close these deals before the holiday season is upon us, it’s critical that the team meet their deadlines and stay focused. For the leadership teams within private equity and investment banking firms, it can be especially difficult to keep track of people and their activities.
To make sense of all the comings and goings, as well as all the day-to-day milestones and events, we suggest creating or populating a firm-wide calendar into your CRM. This technology can help you manage and increase visibility into firm-wide business development efforts and travel plans at any time of year. Below, we explore several commonly-asked questions and examine where and how technology can help.
Who’s traveling this week/month, and to where? While it may seem like a simple suggestion, a great number of private equity and investment banking firms still don’t keep track of each individual’s travel plans. This type of functionality increases visibility into the key trade shows, conferences and events that the firm will be represented at. It also shows which geographic regions a person or team of people is traveling to. Having a quick reference calendar in centralized place will help your team members more quickly triangulate relationships and further business development opportunities.
How prepared are we for this month’s activities? The leadership at private equity and investment banking firms should encourage the use of calendars and highly-visible deadlines for planning purposes, as well. We suggest integrating these calendars into Monday morning meetings so that the group can discuss what each person needs. From the need for new marketing collateral to the need for increased diligence resources in the run-up to an LOI, these calendars will help the team become more prepared for all of the upcoming and various business development and deal activities.
Are there any roadblocks? Which team members have bandwidth to assist? Increased transparency helps your team to more quickly identify potential roadblocks or barriers to getting a task completed or a deal to close. If these impediments are identified, it’s important that you’re able to act quickly. Leveraging tools like staffing dashboards (seen below) can help you easily discern which team members have the capacity to jump in and help. The calendar, with its visibility on the team’s travel plans, will also help you to see if that person will be in the office, working remotely or out of pocket.
Having this type of transparency will help the firm’s leadership team maintain a view of the staff’s progress towards its goals. It also encourages team members to help one another out when needed. With the New Year quickly approaching, it’s a great time to encourage your team to make new habits – such as calendaring their activities – to help move the needle forward for the entire firm.
To learn more about our best practices for maintaining visibility on firm-wide activities and goals, contact us today!
Undoubtedly, a lot has changed in the world of the private capital markets since then. Between the steady resurgence and growth of the U.S. economy we’ve witnessed of late and the more favorable tax circumstances for privately-held companies, dealmakers should feel like the days of low close rates are in the past. But do they?
In the increasingly competitive deal landscape of today, the last thing private equity professionals want to do is chase deals down rabbit holes and come up with nothing. But given all of the room for error that still exists in any merger or acquisition process, there will certainly always be a percentage of deals that fall apart.
Instead of accepting defeat, we’ve compiled our four best recommendations for “making lemonade,” so to speak, using data and learnings from our clients over the past decade.
Track who was involved
Seasoned intermediaries keep deal negotiation fair and honest, and keep emotion from getting out of hand. If a certain intermediary keeps the deal on the tracks for a long time, that should certainly be noted. Conversely, if an intermediary brings an incredible deal to your firm’s doorstep, but then can’t execute an IOI, that should also be considered when making future decisions.
Similarly, the firm should maintain detailed records of every business development, deal or operational professional that participated in the deal process. If, for example, getting a operations team member with expertise in healthcare helps to accelerate and close a deal in that industry, that should be tracked. Doing so will help your team be more critical of when and how it pulls key personnel into the fold and get the deal to close.
Don’t forget about your diligence efforts
All too often, private equity firms consider deals, begin the IOI and LOI processes, and hit a snag in diligence. Especially when the diligence work is outsourced, that knowledge rarely makes it back into the firm’s proprietary database. All diligence data and findings should be readily accessible in your CRM systems or virtual data rooms.
Perform a bid analysis
Keeping consistent and detailed records of the volume of bids submitted, as well as the amount, will certainly help your private equity perform discern whether or not it missed out on a deal they could have, or should have closed. No matter if the bid was too high or too low, your team will be able to use this data to more accurately submit future bids for deals of a similar size or industry.
In 2016, Sutton Place Strategies found that only 25% to 30% of companies brought to market are sold. That means that your fail rate is, in essence, everyone’s fail rate. No matter what – be sure to keep track of whether any bid was accepted. You can learn a lot about the deals that never close with anyone!
Don’t sugarcoat it
When your team loses a deal, a detailed reason for the failure should be accounted for within your CRM. That data is extremely valuable because it can be leveraged to inform future strategies and guide the way the team spends time and resources.
Whether that information leads you to halt certain business development activities for a period of time, or double-down on the existing strategy, having the visibility (backed by data) helps to better steer the ship. In the nearly 10 years since John Warrilow’s reported on Riverside’s abnormally low close rate, which mistakes does your team still make when trying to close deals? And which of the circumstances impacting the close rate does your team have in its control? Without a high-powered technology fueled by data, your firm might never know. While no tool could ever guarantee a closed deal, the key to modern dealmaking is to harness data and technology so that the likelihood of close can be increase
Last week, the DealCloud team was honored to be recognized by the Charlotte Business Journal’s Fast 50, which recognizes the fastest growing companies in the region. Earlier this year, DealCloud added its 200th new client of 2018 which represents a 40% growth in new clients over the same period last year.
Business development “road warriors” know the challenges of on-the-road dealmaking all too well. From trains, to planes, to automobiles, it’s clear that copious amounts of travel will continue to be a huge part of the job for private equity and investment banking professionals.
In a recent Mergers & Acquisitions article, Mary Kathleen Flynn and Demitri Diakantonis identify 15 cities that provide fertile environments for dealmaking and highlight the key players and newsworthy and recent transactions in each. This begs the question: Does your team have solid coverage of each of these markets?
Read on to learn the top three reasons dealmakers miss out on business development opportunities when traveling, and how to improve your next trip with the help of technology.
1. Lack of transparency
Do you know what part of the country your developing deals are in? Do your teammates have the same visibility into the firm’s geographic reach as you do? Is geographic reach something that the firm analyzes on the quarter-to-quarter basis? If your answer to any of these questions is “No,” then it’s safe to say your firm lacks the transparency it needs to execute on business development travel effectively.
If your firm wants to improve its geographical business development efforts, it will first need to identify which proprietary data the firm owns that can be leveraged. For example, you’ll want visibility into which contacts are located in the city you’re traveling to, how long it’s been since you last had contact, and what was discussed in that last email/call/meeting. This information is critical to picking the relationship up where it left off, and without it, your team members lose credibility.
Having a balanced mix of proprietary and third-party geographic data is a great way to make your team’s business trips more productive because it will shine light on the places that have gone unnoticed and illuminate the places that are ripe for opportunity.
3. Lack of speed
There’s many advantages to organizing your business development efforts and team members by geography. It helps to maintain deeper relationships, helps the team focus their time on local economies, and allows them to attend more location-specific events and conferences. Putting all organizational strategies aside, however, it’s important that business development professionals be able to seize opportunities whenever and wherever they arise.
It’s no secret that speed is a critical component of dealmaking, but too often private equity and investment banking professionals pour countless hours into planning business travel.
From mapping the locations of each office you plan to visit in a given city (see above), to compiling the phone numbers of private company owners you intend to follow up with, to double-checking whether or not there’s an investor nearby that is owed a visit… planning business travel should not be an arduous or time-intensive task. With data and the right technology, dealmakers can better fuel their business development efforts when on the road or out of the office.
To learn more about ways to improve your firm’s geographic coverage, contact us.