A Brief Guide to Business Development

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Business rarely falls into the lap of any investment bank or M&A intermediary. The best in the industry, like any other, are marked by their competence, which includes strong selling skills.

Henry Ford II chose Goldman Sachs as his investment bank of choice not because they were considered the best (at the time, they weren’t) but rather because CEO Sidney Weinberg charmed him.

What is Business Development?

Business development is the combination of strategies, processes, and decisions that an organization takes to increase sales (develop business). The importance of business development is underlined by the fact that if a company doesn’t bring in new business, either with existing clients or new ones, it will eventually fail. Without clients, there is no work. And without work, there is no money.

Many of the most successful companies in the world are the ones with the best business development functions, as opposed to the best technical skills.

Methods of Business Development

Given the importance of business development just outlined, it should come as no surprise that companies are always on the lookout for new methods of business development.

The obvious tool here is marketing automation (see below), but for professional services firms like M&A, more traditional methods are difficult to beat.

Most of the categories listed below often come under the networking umbrella.

• Ask for advice: This is a common route to take, particularly for young companies. Senior executives at large firms are often happy to share non-confidential advice, and this opens the door to other conversations.
• Attend conferences: It should come as no surprise to people that this is a good way to network. But try to be specific. If you’re in the middle market, look for conferences that appeal to middle market companies. If you’ve got an industry focus in M&A, look at events in that industry so that your company can be the only M&A firm to attend. 
• Speak: Ideally, use the conferences to speak, raising awareness of your company before, during, and after the event. The more practice, the better an outlet for business development that this becomes. Speak on news slots, podcasts, webinars, and more. 
• Generate content: It’s a cliche that content is a good way to sell, but in professional services like M&A, this is undoubtedly the case. You need something to differentiate yourself from the crowd, and to generate trust (see next section). Well-written content is a good way to achieve this. 
• Host summits: Although a costly way to conduct business development, with you picking up the fees for speaker fees, travel costs, event location, etc., summits are an excellent way to generate a buzz around your services, as most of the speakers will market through their channels as well. 

The 3 R’s of Business Development 

According to Tom McMakin and Doug Fletcher, the authors of "How Clients Buy", unlike products, professional services tend to be purchased for three reasons, which they call the "3 R’s of Business Development".

They are as follows:

1. Reputation: “I read that their investment bank has won the best investment bank award three years in a row."
2. Referral: "I have a colleague who raised capital recently, and they said that your investment bank handled it, and everything went smoothly."
3. Relationships: "An old friend of mine from college is a really smart woman that I trust. She’s working in investment banking now."

1. If Possible, Find a Niche

This is as true for those in an area of M&A as it is for any other business. It can be difficult to differentiate your service offering in a sea of companies offering identical services.

But finding a niche, such as an industry focus, allows you to hone your pitch for a particular group in the market.

For example, if your speciality is tech and tech valuations, this niche will be an asset when you conduct business development with tech companies. And the more you stay in one area, the more contacts you retain and the more you understand what buyers are looking for.

2. The Deal With Automated Marketing

When selling professional services, you’re not selling consumer goods to the mass market.

Recalling the 3 R’s from above, it is worth noting that automated marketing has little impact on any of them. If anything, it may even diminish them.

There are a limited number of companies that want to use your services, a few hundred probably, so it’s better not to treat them as a mass market. Instead, use a more personalized approach, and it will pay dividends.

3. Be Organized

The lack of automated marketing doesn’t imply a lack of technology altogether.

DealRoom had one user that used its M&A software services to show potential clients the kind of work that it was doing.

It provided view-only access to a series of non-confidential pitch decks, investment memorandums, valuations, and statistics on transactions closed for new clients to access.

Not only did it engage the customer more, it also showed them that the company was producing excellent content, and that they were running a professional operation. 

Conclusion

This article touched on the importance of business development and how it is conducted. Business development can make or break a company, as it is closely linked to cash flows.

Talk to us today about how our M&A platform with built-in virtual data room services can be applied to your business development efforts.