Sophisticated content about the details of the Midmarket deal making process will generate more deal flow for Middle Market advisors, according to a webinar conducted by John Carvalho, President of Divestopedia and Stone Oak Capital Inc.
The webinar, entitled The Changing World of Private Equity Deal Sourcing, notes how the Middle market deal space is extremely crowded, but that great deal sourcing practices can significantly help middle market advisors source more deals.
Online publishing complements traditional deal flow efforts
Notably, Carvalho details the tremendous cost and effort some Mid-Market advisors are currently making to source good deals. In some cases, this deal sourcing requires travel of up to 30 weeks a year, with spends of between $450,000 to 1 million annually.
He explains how an online strategy would make these efforts more efficient and less costly. A sophisticated online effort that strengthens your firm’s brand awareness would sit beside other sophisticated deal flow initiatives, including a carefully defined deal focus, more interaction with M&A intermediaries, and increased targeting of companies that might sell. Importantly, Carvalho explains that if more relevant and high quality deal flow finds you from this online effort, it’s succeeding.
Carvalho also cites industry thought leader on the subject, David Teten, who has identified 5 best practices to generating more deal flow, which are the establishment of a specialised outbound origination program, via the deployment of a dedicated business development professional, creating opportunities instead of waiting for them, targeting companies that are flashing deal signals, installing a CRM system, and leveraging social media. Also important to note: Another industry leader in advocating social media use by Mid-Market advisors, Axial, in a survey of their members, found that 89% of CEOs research potential contacts online before doing anything else.
There’s scepticism about social media in the Middle Market, but it does work
Carvalho notes that there’s a lot of scepticism about social media among Mid-Market advisors, hence they’ve been slow adaptors. He explains that there’s a perception that deal flow found online may be low quality. And that Middle-Market dealmaking is seen as a relationship business, which social media will never replace. Efficiencies can, however, be achieved, as Carvalho explains, by initiating connections online that become conduits to deals.
As a counter to the scepticism about social media, Carvalho notes that social media should be seen simply as a distribution channel to increase outreach. He cites in particular how:
- Social media savvy Millennials already in corporate decision-making positions are increasingly turning to social media to find Middle-Market advisors
- Indirect online-generated relationships can be a significant source of deal opportunities.
- Educational content can build brand and build investment leads.
- Among the top reasons companies select a Middle-Market advisor is brand recognition and the firm’s demonstrated expertise (which online content marketing can amplify).
- The Riverside Companies have said their brand recognition helps bring in more deals.
Designing a middle market focused social media strategy
Carvalho details how there should be 4 goals for an online social media strategy for a Middle-Market advisor: Build Brand; Drive Traffic; Demonstrate Expertise; and Generate Leads.
What type of content?
There’s an appetite from the C-Suite to learn more about the deal process. The most successful forms of content involve digging deeper into topics and issues for business owners to know about before doing transactions – things beyond the superficial. Middle-Market advisory firms, therefore, can create content from their experience in dealmaking, Carvalho explains. Case studies, videos, and articles about the process can be created from this experience. But most firms don’t have staff able to do this, he details (this is where firms can work with a social media savvy writer with knowledge of the Middle Market, to help them develop and distribute content)
Which distribution channels?
Deal sourcing platforms, your firm website, third party publications, and social media sites including LinkedIn and Twitter (the two prime sources for promoting midmarket content, with YouTube becoming more popular) are ideal as distribution channels for your online content, Carvalho detailed. He also suggests the possibility of using sites not often used by mid-market advisors as a means by which to generate even more exposure. In a workplace increasingly composed of millenials (35% of the workforce by 2020), expanding the scope of your sophisticated online presence is an important long-term strategy to consider for expanding deal flow
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