3 Key Principles to Follow When Rolling Out New Capital Markets Technologies Firm-Wide

It’s completely natural for capital markets leaders and managers to have some worries about the way a new technology solution will impact individuals, teams, and internal processes post-implementation. That’s why some organizations try to “soften the blow” by only rolling out the technology to a smaller, controlled group of users (such as by industry specialization or geographic coverage) instead of broadly across the organization.

Private equity and investment banking leaders usually come to ponder a “phased” or “team-by-team” approach because they’ve never completed a sizable internal technology implementation before; because they want to identify and triage challenges with a smaller group of people rather than expose the masses to a potential issue; or because of other trepidations. But when it comes time to make a decision, the only question that members of the leadership team and the buying committee are really trying to answer is: how painful is this going to be?

In this article, we examine the three fundamental principles to consider when rolling out a new technology. With hundreds of investors, advisors, and lenders faced with the need to make major internal technological shifts each day, these truths can help capital markets professionals decide what approach makes the most sense for their unique organization.

Principle #1: Don’t let what makes your firm unique slow you down

The capital markets are complex. That’s why Principle #1 emphasizes why any new technology being implemented internally should be purpose-built to handle the complex relationships, responsibilities and structures of the industry. In other words, if you have the opportunity to configure your new technology to match the intricate inner-workings of your firm and the strategies you execute on, we recommend leaning into these intricacies rather than shying away from them.

In the state of modern dealmaking, new fundraising, advisory, investment, and other opportunities come from all angles, all the time. If your teams use disparate technology platforms, communication and visibility will decrease, and your firm will miss out on new deals and engagements. To curb this, best-in-class firms are building and designing their technology solutions to meet the needs of the entire firm, however complex or unique each group or individual may be.

A common best practice is to align the technology platform to the existing team orientation, whether that be by product/service offering, coverage designations, function, etc. More often than not, capital markets professionals wear many hats and have overlapping responsibilities, so it’s best to allow all of those instances to be illuminated by the technology. Doing so will drive better outcomes in deals and fundraising processes. It will promote a more interconnected workplace.

Principle #2: This is an investment… with a high return

Buying a new technology requires money… but implementing one requires time. That’s why Principle #2 of rolling out a new technology emphasizes the time your team will need to commit in order to make the solution valuable.

Going into the implementation and roll-out stages of a technology investment, it’s important that all teams discuss how much time and energy each person can expect to invest. If the purchase is viewed as “just a test,” or a “trial,” it won’t garner the support it needs to spur user adoption and meaningful organizational change. If some people or teams are left out of this mutually agreed upon commitment, or are only included on Phase 3, for example, they are more likely to be disengaged when it’s their turn to participate and feel as though the solution “wasn’t built for them.”

Just as investors would never buy a company, let it sit idle, and only “test” out new ways to generate revenue, investment banking and private equity firms should never buy new technologies without devoting meaningful resources and human capital to the implementation and roll-out. You simply cannot disconnect the financial investment from the investment of time from all parties, and if you do, you’re setting the technology up to fail or fall short of expectations.

Principle #3: You get what you give

Nobody wants to spend weeks (or even months) going through the sales, legal and compliance processes associated with buying a new internal technology solution just to have it fail or be poorly adopted. That’s why Principle #3 of rolling out a new technology emphasizes why buy-in across leadership teams, key stakeholders, and end users is critical to success.

Whether switching systems, or purchasing a technology platform for the first time, it’s extremely important that members of your team see that the technology is being purchased in response to the pain experienced by the firm day-to-day. In other words, teams should be well-oriented with the problems that the technology will address, and how solving those problems will make the firm more efficient and more successful. 

It’s also important that the technology is described as vetted, secure, and impactful by key stakeholders such as Chief Information Officers, Chief Technology Officers, and other team members that have experience in rolling out new technologies firm-wide. Similarly, if Partners and Managing Directors position the technology as the new normal, it will be more quickly adopted. These types of endorsements will inevitably trickle down to the end users, and the end users will be better-positioned to succeed.


If the implementation of your CRM system feels overwhelming and complex, rest assured that following these three simple principles will get your team off to a great start.

And remember – you don’t have to go it alone. Over 600 firms have migrated to DealCloud’s platform because of the way it adapts to meet the complexities of modern deal making and of business development teams of all shapes and sizes. Our dedicated teams are available to provide guidance, and we’re proud to share our best practices and blueprints for making implementation faster and more meaningful.

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Ride the Strong Performance Wave Well Into 2019 with These 2 Dashboards

According to a report released by Golub Capital last week, “U.S. middle-market private companies enjoyed the strongest earnings growth in years, propelled by high demand for products and services.” Those positive numbers have piqued the interest of private capital markets participants struggling to maintain consistency and order amidst geopolitical tumult.

With almost half of U.S. chief financial officers suspecting that a recession will hit the U.S. economy by the end of 2019, however, its best not to let the strong Q4 earnings mislead you in your investment decisions.

Whether you’re a private equity professional focused on improving operations, or a corporate executive (CEO, CFO, etc.) looking to ride the successes of Q4 as far into 2019 as possible, see below for two dashboards that will help you stay organized and on target:

The Executive Network Dashboard

Creating meaningful gains requires expert systems and highly talented people, especially given the emphasis being place on operational value creation (versus simple financial engineering). Some firms even start with the executive because of their unique skill set or expertise, and build or buy a company based on him/her. That’s why private equity firms and management teams alike need to keep their executive network connections close.

While larger firms may have a dedicated person on staff to track and maintain relationships with top operating talent, the majority of firms we speak to view “executive network maintenance” as a shared responsibility. Given that, most firms leverage “Executive Network” dashboards like the one below to monitor the availability of various operators for advisory, hands-on, Board-level supervision, expert opinion, or other work.

These dashboards become particularly useful as deals progress. For add-on and platform deals alike, it’s incredibly valuable for private equity firms and management teams to have visibility on which operating professionals will be available to assist with key due diligence concerns, industry-specific competitor analysis, or integration once the deal has closed.

Many firms, when tapping into their executive network, value the ability to zero-in on industry specialists, such as healthcare tech experts.

Maintaining strong visibility on your firm’s talent network will not only help you mitigate risk, but it will help your firm think of new ways to respond to the increased demand for products and services, and ultimately propel strong earnings further into the year.

The Risk Analysis Dashboard

Nothing de-rails a quarter like an internal issue that takes your eyes off the ball. While risk mitigation is often not the main focus of senior leadership or even of operating partners, it’s incredibly important that visibility on ongoing issues be maintained.

Creating a “risk” or “issues” dashboard will help your organization’s leaders monitor the progress made on any given problem, and what deals or business opportunities that problem could affect. We recommend leveraging certain unique tags for risks and issues such as priority level (low, medium, high) and details (which turn into searchable, free-form notes).

If you’re keen to keep your corporate growth story strong, this type of reporting should be central to your organizational structure. Users can receive notifications when an issue is logged for a deal that they own, and management can receive notifications every time the status changes (for example, from “work in progress” to “resolved”). No matter the status, all risk and issues will still be stored in your CRM, and can be pulled into reports or turned into institutional knowledge.

While the executive team may not be in the weeds of every issue, it’s important that they stay abreast of anything that will put performance at risk.

When performance is strong (like it was in Q4 2018), it’s important that private equity firms and management teams think critically about what’s needed to sustain that growth. Luckily, there are internal tools that can help. These two dashboards are just a few simple ways to help increase visibility into the “make or break” factors that keep companies growing: talent and risk.

Interested in learning more about leveraging DealCloud for internal organization and monitoring? Talk to our team today!

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New Year, New Strategy: Why You’ll Need a Deal Management Platform for Sourcing Add-ons in 2019

2018 was a monster year for deals. According to Pitchbook’s 2018 US PE Breakdown report, deal activity surpassed $800 billion for the second-highest annual figure ever. An interesting trend that the report uncovered is that, in 2018, “the proportion of deals sourced from other financial sponsors fell steadily for nearly a decade.” Even more specifically, it found that add-ons are more likely to not have private equity-backing prior to acquisition.

With the buy-and-build trend continuing to show its validity, many dealmakers are preparing to execute a more sophisticated and purpose-driven add-on strategy in 2019. With any new strategy, though, comes challenges. In this article, we explore three ways for private equity professionals and corporate buyers to more strategically source add-ons in 2019, given the trends we observed in 2018.

Know the relationship history

While the inability to identify private companies in the U.S. is not a new challenge, many private equity firms and corporate development professionals still seem to struggle with their private company relationship management. More often than not, details of the relationship and past conversations are housed in several disparate locations across the firm, or not tracked at all.

A best practice, however, is that all of the details about your firm’s correspondences with a private company be held in one central platform and be easily accessible to everyone at your firm. That way, it is clear where the relationship stands, what the next steps are, and which team member is running point.

DealCloud’s platform makes it easy for all correspondences with a private company to be tracked and accessible in one place

Analyze the industry

“The growth in add-on size may cause problems with the buy-and-build strategy because these higher-priced add-ons likely make blending down the purchase-price multiple more difficult,” says Pitchbook in its report. In order to avoid over-paying for add-on deals, private equity firms and corporate development teams should keep a keen eye on the market forces at play in any given industry.

With a mix of both proprietary and third-party data, these teams can closely watch the number of deals received in a given industry, the EBITDA range for each, and which intermediaries are bringing deals to market.

Best-in-class firms leverage industry analytics to keep purchase pricing fair

Establish a healthy blend of proprietary and third-party data

No matter if you’re a search fund just getting started, a corporate development team establishing a new growth strategy, or a private equity fund with a tried-and-true process, it’s critical that you gather a full understanding of a private company before picking up the phone or hosting a management meeting. These days, private company data is plentiful and can be fully integrated into your deal and relationship management platforms.

While proprietary data (such as logged conversations with private company owners and CFOs) is ideal, firms need to be prepared to start the relationship at ground zero. Leveraging third-party data sets like DataFox and SourceScrub will help arm sourcing and origination teams with the data it needs to have a productive conversation directly with business owners.

Interested in learning more about DealCloud’s deal management platform? Talk to our team today!

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What’s on the Docket? Maintaining Transparency with a Firm-Wide Calendar

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.

DealCloud makes it easy for everyone to sync their calendars and enable transparency.

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.

What major deadlines are about to hit?
Another use case for creating/implementing a firm-wide calendar is to maintain increased visibility on deadlines and deal milestones. These can and should be customized to match the business development and deal processes that exist elsewhere in your CRM. So, for example, if your firm is tracking several management meetings and IOIs, those can be seen on the calendar.

In addition to your calendar, easily track your tasks in a central location with DealCloud.

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.

By tracking pipeline and business development activities in DealCloud, management views like staffing dashboards are easily generated.

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!

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Why Do Your Deals (Still) Fall Apart?

In 2010, Inc’s John Warrilow reported on the fact that private equity giant Riverside Company closed only 15 of the 4,228 acquisitions it considered in 2009. Around the same time, Harvard Business Review reported that over 50% of deals don’t close, or fall short of expectations.

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

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The Top Three Reasons Your BD Travel is Less Productive Than It Could Be

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.

Regions Dashboard
DealCloud can aggregate your business development activities into a regional dashboard. Many clients look at Metro Areas but Airport codes are a popular option as well.

Modern-day investment banks and private equity firms keep track of deals at every stage in the pipeline by leveraging real-time data dashboards similar to the one seen above. Whether your firm is executing on a global roll-up strategy or a small, regional debt deal, it’s critical that every team member, at any time of day, have access to this information. Gone are the days planning business travel in Excel and Outlook.

2. Lack of data

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.

SPS Geo Pivot.PNG
Sutton Place Strategies data, which is integrated through the DealCloud DataCortex, can aid in planning business travel, while giving you a sense of the market in a particular geography.

If your firm has insufficient proprietary data, and therefore insufficient geographic coverage, a best practice to follow is to infuse that proprietary data with third-party data sources, such as Sutton Place Strategies, Pitchbook, DataFox and more. With this data strategy, firms can sync new global company, contact, and deal information with their proprietary data, creating a single cohesive record.

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.

Google Maps DealCloud.PNG
Integrated Google Maps functionality allows you to see who you know, and where they are.

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.