M&A Firms – Get Competitive In 2017
You probably keep hearing about how great a year 2016 was for middle market M&A. Yes, valuations were up, but middle market deal count has actually been dropping for more than 18 months particularly deals acquired by PE buyers. Below are a few stats that may be of interest:
- In 2015 more than 4,400 middle market companies were acquired by PE buyers
- In 2016 less than 3,800 middle market companies were acquired by PE buyers
- In between 2015 and 2016 more than 300 new firms entered the market
So, in a time where fewer deals are being chased by more broker and bankers, how do you stay competitive?
#1 Have the horsepower
Many business owners prefer to work with firms that look and feel well resourced. Thanks to a number of great technologies and services like ours, smaller, independent M&A firms have the ability to look and feel bigger than they actually are. With more firms competing for fewer deals, you need to be able to prove to your clients that you have the horsepower to handle their transaction. If you do not have a dedicated support team, or do not have significant access to high-quality data sources you should consider levering our variable cost research fulfillment model to ensure that when you need access to resources you have them.
#2 Provide more than sell-side advisory services
With more than 5000 sell side focused M&A firms operating in the U.S., competitive firms simply sell more than one service. Being able to sell more consultative, upstream services can give a small firm an easier, less costly point of entry to building client trust. Consider offering management consulting, strategy, valuation and other similar services. Additionally, should you offer other services, do not treat them as an afterthought on your website and in your marketing materials. Branding your firm as a soup to nuts service provider for business owners experiencing growth or nearing an exit event can ensure your firm stands out from the crowd.
#3 Invest in the pitch
Is your website up to date? Do you have peripheral marketing materials? If the answer is no, you should consider investing in updating your pitch presentation. The best M&A firms in the market have compelling materials to share with prospective clients. Updating or designing your firm’s pitch presentation, brochures or website does not need to be expensive and will pay dividends. On some level, no matter how strong the referral or in person impression, a business owner will, at some level, judge your book by its cover. Ask yourself, do your marketing materials appear as professional as you do in person? If the answer is no, its time to do something about it.
Regardless of how you address the changing competitive market, we want to encourage you to take some action. Each year the landscape of M&A service providers changes. Your ability to keep up with these changes will, in part define your future success.