As middle-market focused investment bankers know, securing new proprietary deal flow is imperative to maintaining and building an investment banking business. Most investment bankers secure deal flow via referrals from other service providers to the middle market, while networking among the membership of industry specific groups like the Association for Corporate Growth (ACG), the Turnaround Management Association (TMA), and others.
In order to secure maximum proprietary deal flow, however, investment banking professionals should also, according to David Teten, Chairman of Navon Partners, a New York-based data mining and analytics company focused on identifying investment opportunities in illiquid assets:
- Build specialized outbound origination programs;
- Create opportunities, instead of waiting for opportunities to appear;
- Look for targets which are both attractive investments and are likely welcome to outside investors;
- Use Customer Relationship Management (CRM) systems to efficiently manage prospecting; and
- Leverage social media (emphasis added)
I agree with Mr. Teten, and have written previously about my strong belief that middle market investment banks ought to establish outbound origination efforts to compliment traditional referral relationship deal flow sourcing. I also strongly believe middle market investment bankers should be blogging – and distributing that content across relevant social media platforms to amplify their message, as well as actively engaging with their audiences on the topics on which they blog.
Why is Social Media important?
“Social media is emerging from its adolescent phase and is rapidly maturing”, reports social media analyst and advisor Jeff Bullas. Indeed, “In 2010, the Fortune 100 were participating on social media but not to the extent they are now. The social networks were used for broadcasting but there was limited engagement. In 2012, [companies] are having constant conversations with their customers and followers and creating vast amounts of digital content, reports Bullas.
Search Engine Journal provides a detailed infographic reflecting a “steep curve of the user growth rate in all age ranges and demographics, and the continuing pervasiveness of social networking into every facet of work, play and life in general.”
Essentially, the use of social media by those who are the consumers of middle market corporate advisory services are expanding rapidly. I believe the use of blogging by middle market investment bankers and engagement on relevant social media platforms of importance to your audiences — is now essential to maximizing your ability to secure new business.
Why is blogging of particular importance?
Seventy-six percent of [corporate general counsels] say they attribute some level of importance to a lawyer’s blog when deciding which law firms to retain, as Kevin O’Keefe, CEO and Publisher of LexBlog, Inc., a Seattle-based company providing blogging services to over 6,000 lawyers and legal sector professionals, reported recently. This figure is important for middle market investment bankers too. Those corporate general counsels and other senior management of middle market companies are now increasingly turning to blogs and other social media sources for news and information about issues of importance to them, including where to secure sources of equity, debt, sell-side and buy-side advisory assistance, valuation and restructuring services, and more.
As LexBlog outlines: “Functioning as a practice development tool, a blog amplifies and extends your networking with clients, prospective clients and referral sources. Typical brochure-style…websites are quickly outdated, static, neutral and passive. Blogs are timely, dynamic, personal and interactive – an agile practice development tool that focuses directly on your target audience.”
Important to note also are statistics reflecting an increasing acceptance of blogging among companies as a means by which to reach their target audiences. In 2007 for example, 16% of companies used blogs for marketing. By 2012, that figure had jumped to 43%.
Importantly, blogs also provide an opportunity to create customized content focused on ideal potential clients, making access to those potential clients much easier during proprietary deal origination efforts.
Target client base: a highly diffuse Middle-Market
According to the Middle Market Center at Ohio State University, in a study entitled The Market that Moves America, “the middle market economy is one of the most important drivers of America’s economy, compromising companies with annual revenue in excess of $10 Million Dollars and less than $1 Billion dollars. If the Middle Market were a country, its GDP would rank it as the fourth-largest economy in the world — just behind Japan but ahead of Germany. They employ 41 million workers, representing a full 34% of total U.S. private employment.”
The middle market is, however, geographically highly diffuse. As most middle market advisors secure their deal flow from referral sources, their access to new clients among middle market corporate management teams is limited by the scope of those referral sources reach. Therefore, middle market corporate management teams in areas under-served by corporate legal and financial services professionals – a market already under-banked and under-served wherever you are in America — can more effectively be reached by those middle market investment bankers who take the initiative to blog – putting you a mouse-click away from many more corporate managers than you would gain exposure to otherwise.
Additionally, overseas companies seeking to secure funding and make acquisitions in the US, will much more easily find US-based advisors via blogs and active social media engagement – than continuously updated static websites. It’s important to remember that your blog will be available 24/7, providing regularly updated, prescient information to potential clients not just in America – but throughout the world.
Who in the Middle-Market is already blogging?
Forward thinking Middle-Market investment banking professionals are already blogging, and distributing their content across relevant social media platforms including Twitter, Google+, Facebook, LinkedIn and PEHub, among others. This serves to amplify those messages by making them easier to be found and accessed by executives searching for information about who might help them.
Among those investment banking firms that are at present blogging are Allegiance Capital Corporation of Dallas, Texas, and Corporate Finance Associates of Laguna Hills, California. Among private equity groups, New York’s Health Point Capital actively blogs. International law firm McKenna, Long & Aldridge LLP maintains Middle Market Money Blog, which provides “insight and guidance into legislation, regulation and trends to assist entrepreneurs and emerging growth companies address corporate finance and regulatory hurdles”.
What are they blogging about?
- Allegiance Capital’s most recent blogpost is about whether now is the perfect time to sell an internet retailing company.
- Corporate Finance Associates most recent post is entitled: 7 M&A Don’ts for Business Sellers.
- Health Point Capital reported on Israel’s Mazor Robotics’ recent $15 million private placement that the company will use to support an ADR program. ADRs allow non-U.S. companies to trade on U.S. exchanges.
- And McKenna, Long & Aldridge just announced the launch of its mid-market blog.
Relevant social media platforms amplify your message
As author Jeff Haden recently outlined in Business Insider: “A friend of mine landed his last six clients as a direct result of his participation in LinkedIn Groups.” To that end, one example of a highly influential legal blog with a large LinkedIn Group of the same name is China Law Blog, authored by Dan Harris of Harris & Moure pllc, a Seattle-based law firm.
China Law Blog LinkedIn Group, at the time of this writing, currently has 6,025 members – all interested in discussing topics related to Harris & Moure’s legal practice: China law and business. Investment Bankers would do well to follow the same model about issues of importance to middle market corporate management teams – by creating a LinkedIn Group around your blogs theme.
As those middle market advisors I’ve mentioned already know: By engaging in blogging as the centerpiece of a social media effort, middle market advisors will markedly increase their message among corporate management teams, potential new referral sources, and the journalists who cover the middle market.
Conclusion
The importance of social media in the decision making process of senior corporate management teams is increasing rapidly. Compared to the costs associated with traditional referral methods used to generate proprietary deal flow, it is likely that a blog will generate more proprietary deal flow at significantly less cost. As more investment banks, private equity groups and law firms dedicated to serving the middle market are joining the ranks of those blogging – it is important for those who wish to remain actively involved in serving the middle market to embrace this new means by which to reach many more among your target audiences.
Filed under: Financial Services, Funds & IBanks, Social Media
