Technology is at the forefront of nearly every new innovation in the modern business world, and mergers and acquisitions are no exception. From supercomputing to social media, the processes and best practices behind sourcing and managing deals have all been shaped by tech to gain an edge. And make no mistake: We are living in a moment of wildly accelerated technological progress.
The result has been a shift in our industry. The way deals have historically been sourced won’t work in the future. Old sourcing is out. New tech has leveled the field.
For smaller organizations and family offices, this is a boon. The best tools are no longer limited to a select few. Greater access to technology and data is allowing disruptors and non-establishment members to make new connections, grow and meet their business aspirations. Deal sourcing is no longer about which juggernaut firms have the most established contacts or the deepest pockets to fund their own tech development. It’s about aligning with strategic partners who already have the necessary networks, data and tech tools, allowing firms to focus on what they do best: building human relationships that lead to the best business outcomes.
How the Deal-Sourcing Playing Field Has Been Leveled
Industry professionals have been relying on LinkedIn scraping and using the same tools to spam the same inboxes for too long. As a result, firms that have great ideas may never get the chance to share them, due to oversaturation. The lack of differentiation creates a certain stagnation in the industry, allowing players with the biggest stacks of chips to essentially muscle out competitors who otherwise might make better fits for acquisition partners.
The deals over $1 billion are competitive, but usually go to the big-name brands like J.P. Morgan Chase, Goldman Sachs, and Morgan Stanley. However, the mid-market is where real returns can be found, and the volume is much more attractive. But, the fragmented state of the market can make these types of deals more difficult to find, especially for firms lacking the resources to effectively seek them out.
Thankfully, the game is changing. A new wave of technological innovation and data accessibility has begun to create opportunities in the market that allow M&A firms to make the most of their resources and win business based on well timed and positioned ideas paired with relationship-building, rather than just how long they’ve been around, or the size of their existing portfolio. Those who learn and take advantage of the data driven, automated approach to build the right relationships will have the edge moving forward.
The idea: Build capital markets that better serve people by ensuring equitable and seamless dealmaking for all participants. This shift creates an environment in which deal sourcing is more available to a wider range of firms and deal closing remains an area in which anyone can compete based on preparation, insight and value – otherwise known as hard work and merit.
How Deal-Sourcing and Collaborative Tools Work
Consider the amount of resources – time, effort, finances – that go toward deal sourcing at your own firm. Vetting and sizing up prospects makes up an enormous percentage of the overall work when weighed against closing deals and managing partner relationships. But what if you were able to lower your resource investment, optimize your deal-sourcing operations and turn the majority of your focus to the area of your business that you want to stand on most – relationship building?
Automation and data-driven sourcing techniques will serve you well. To start, a technique you can use is honing your target list by creating an ICP (ideal company profile) that matches your mandate’s parameters, and doing data enrichment to garner actionable insights for contacting decision makers at those companies. Then, you can use Account Based Marketing platforms and AI-supported personalization software to customize your outreach at scale to gain the attention of your prospect. You cannot send generic emails, you have to show them you know their business, introduce the opportunity of working together, and earn the meeting.
You should also leverage intent data to prioritize the companies that are soon to be in-market for funding opportunities or acquisition, helping you get ahead of competitors in building the right relationships before it’s an on-market deal. Intent data is widely under-utilized mainly because it’s been produced in silos by firms with data scraping and modeling teams but it’s now becoming a data set available to more firms via companies like Fintent.
Finally, you can work with partners who have highly qualified deals. We at Finalis are an example of this opportunity because we and our expert bankers manage over 1,600 qualified deals with a matching engine to showcase those that fit your mandates.
Ultimately, using a trustworthy private marketplace like Finalis to find active deals paired with advanced techniques to source off-market deals allows for access to qualified deals that are available right now, while building your long term pipeline of deals that will close in 12-24 months from now. And, you don’t need to fly around the world to an event every week to meet random people at deal tables asking “What deals do you have?”.
The new technology breakthrough in the industry has less to do with broad outreach and more to do with honing in on firms’ targets and finding them with greater and more reliable accuracy. With personalized suggestions, curated networks and strategic automation, you now have the ability to reduce operational complexity and set aside more time and energy toward the human and face-to-face elements of deal-making that sets firms of all sizes apart from the competition.
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