Connecting With the Long Tail of the Middle Market
How PE Firms Can Leverage Branding and Marketing to Increase Deal Flow from “Tier 2” Bankers and Beyond
Unless they’ve gone all-in on direct sourcing, developing and maintaining strong investment banking relationships is a critical step of generating deal flow for middle-market private equity firms. But it’s an inefficient market, and PE firms relying solely on old-school business development methods still miss many of the looks they should be getting — especially if the companies are represented by investment banks they consider to be in the “second tier” (or beyond) of their banking relationships.
Most firms are aware there is a wealth of opportunity resting in the long tail of the investment banking community — what they might deem those “Tier 2” and “Tier 3” firms — that could drive enhanced deal flow and transformative growth. That knowledge aside, firms often do not have the internal resources to communicate with specificity and consistency to every contact that could drive deals — especially when it comes to newly-established boutique banks and local market brokers.
Instead, they focus their business development efforts on “Tier 1” firms that drive the majority of their desired deal flow, and maybe distribute an occasional press release to the remaining list. They’re just not sure how to build the systems that will allow them to scale their efforts.
So, how can PE firms stay top-of-mind with the long tail of the investment banking community without doubling their BD team headcount?
The gap between limited BD resources and long tail opportunities is where differentiated branding and marketing thrive. The networking landscape has shifted to a digital focus — a shift that has surfaced a sea of firms with similar branding, websites and messaging. However, taking advantage of the following tools can elevate a firm’s unique characteristics and truly unlock new deal flow potential from the more distant end of the investment banking community:
Brand Strategy and Messaging:
Differentiated branding and messaging expand a firm’s reach and enhance key message retention among its target audience. In terms of graphic design, research suggests that people connect to and remember messages more effectively when memorable images and well-aligned colors accompany words. Identifying a firm’s true differentiation and reflecting that within the brand’s visual identity while sharing clear and consistent messaging can drive deal flow by making the firm more memorable in the minds of investment banking relationships that fall through the business development cracks. Effective branding should set a perception of the firm in the sector, reflect history and craft a memorable story for your audience to retain long after leaving your website or LinkedIn page.
Website:
Think of your firm’s website as the exterior of your home in a buyer’s real estate market. You don’t want your home to be like every cookie-cutter, builder-grade house on the street—you want to differentiate your home and make it stand out with beautiful architectural features, elegant landscaping, and maybe even a flag representing something you and the potential home buyer both value. It should look sturdy and well-cared-for, not like you used to put in effort when it was built but gave up shortly thereafter. Your website should also represent who you are as a company — if you invest in old-world manufacturing businesses, your website should not look like a bleeding-edge tech company, and vice versa. It needs to reflect the tastes of your target audience and the solid foundation of a custom build. But don’t make the mistake of thinking that focusing on industrial, manufacturing or “blue-collar” businesses means you get a pass when it comes to branding. You can’t neglect your brand because your target portcos are not “fancy” folks. You still need to reflect care and attention, perhaps with fewer bells and whistles. (Think classic, traditional estate versus modern mansion.) A firm’s website serves as its digital first impression — it is your curb appeal!
A firm’s brand look and feel (and subsequently, its website) should match its overall tone and differentiation. A website should catch the eye with representative brand colors that subtly evoke emotion amid a unique, updated design. Messaging should be clear, concise and memorable — it is not sufficient or differentiating to say you’re a “great partner” who “adds value.” Share stories that stick with meaning and purpose! Provide examples of how the firm works with business owners and management teams, as well as your team’s deep expertise in your sectors/subsectors of focus. Equip the banker with the tools they need to understand what you are all about and determine whether you should be included on their ever-narrowing buyer’s list. And when the seller inevitably visits your site to validate their banker’s statements, your website should speak directly to their wants, needs and pain points. Your website is an extremely powerful, yet often overlooked, arrow in your quiver.
Print and Digital Collateral:
Aligning the firm’s collateral materials with the website’s messaging and branding create a consistent impression on the market. Designing materials such as on-brand one-pagers and PowerPoint decks will reinforce the firm’s brand in all the ways it communicates with audiences.
Press Releases:
A closed deal, if communicated well, should be a launching pad of momentum for your firm to drive top-of-mind status and reach as many eyes and ears as possible. That’s why simply putting a press release on your website and blasting it to your entire database is no longer enough. To successfully execute this momentum, firms need to explore going a step further with the following strategies:
Email: Once your firm has mastered messaging and created a website that reflects its brand, how do you get your name in front of the right bankers? Consistent email communication is a key tool to stay top-of-mind. There are beginner, intermediate and advanced methods for leveraging emails:
LinkedIn: LinkedIn is a practical, easy way to stay top-of-mind, especially because almost all investment bankers have a LinkedIn account. Leveraging LinkedIn as a business development tool by adding the right people from your database as LinkedIn connections and posting actively and thoughtfully in correlation with the value-added email content ideas outlined above is a an essential part of reaching bankers when the want to engage (as they scroll LinkedIn) in addition to reaching them in their inbox (where they may be too busy or distracted to engage).
Thought Leadership: Thought leadership pieces can take many forms — from video interviews to written blog posts — and are a fantastic way to position the firm as a leader of the pack. Providing your target audience with the insights and resources from the firm’s specific niche of knowledge (sector, strategy, geography, deal dynamics) elevates the firm to a position of expertise. Covering a recent industry trend can get the firm’s name and value-add in front of previously unknown or unreachable investment banks.
Although the vast landscape of potential investment banking relationships may seem unreachable for PE firms, concentrated efforts on marketing and branding can help bridge the gap between resources and relationships. Nailing down the firm’s brand and messaging is the first step to creating a website and collateral reflective of the firm’s goals and investment focus. Going a step further, consistent and concise messaging on email and social media, as well as leveraging press releases, thought leadership and sector expertise, can expand the firm’s footprint, reach the long tail community of investment banking firms and unlock transformative new streams of deal flow.