Originally published by Forbes, featuring Frank Williamson.
We’re grateful to Forbes for the opportunity to contribute to this important conversation. Read the full article below.
For many providers of one-and-done products and services, referrals are crucial. We joke that in our line of work, where we represent organizations selling or merging all their operations into a larger one, we put our clients out of business. Our successful clients literally don’t exist to utilize our services a second time.
Some investment banking clients opt to leave their situation unchanged, like a sailor who would not dream of parting with a beloved 40-year-old boat. Some walk away satisfied knowing they have everything they need, like a buyer of a life insurance policy. In each case, even exceptional work doesn’t guarantee that a client will call again. One way to view investment banking is that referral partners, dealers or agents are our real clients, rather than the people who ultimately hire us and pay the bills.
It takes time and consistent effort to build and maintain an active referral network that not only keeps our businesses busy, but allows us to do our highest level of work. Staying top of mind for partners with complementary specialties makes it possible for bankers to achieve a healthy flow of new business opportunities while also being a resource to others within their referral network.
Here are four ways to begin doing that:
1. Share your good news.
Some bankers are predisposed toward quiet competence: doing their job well, leaving clients happy and moving on to their next project. But building a referral network requires unlearning those tendencies and engaging in some unapologetic self-promotion.
If you’re good at solving a particular type of problem for clients or are successful at closing deals in a certain subset of the market, don’t keep it to yourself. Tell your story to businesses similar to the client you just assisted, so they understand your capabilities and how you might be able to help.
The basic rules of marketing apply. Tailor your message for the audience you want to reach, using printed fliers, videos, podcasts or whatever type of media they consume. If you’re trying to reach companies with a particular specialty, consider purchasing a nationwide mailing list. And keep up a regular cadence of messaging to build your brand and engender trust.
2. Find a way to always say yes.
Every investment banker has a certain area of expertise. Many are candid with clients about what situations fall into their wheelhouse and which don’t.
Sometimes, though, too much candor can work against a person. In this case, it can condition clients to only call on you in specific situations, rather than viewing you as a problem-solver who can help no matter the circumstances. While you don’t want to mislead people about what your capabilities are, it also helps to be seen as a connector who can ensure that a problem gets solved, even if you’re not the one solving it directly.
Along with this, do your homework and understand what types of deals are most profitable for you based on an expected success fee at closing. Be disciplined and don’t accept any that require more working capital than you can spare, given the deal’s likelihood of closing.
Instead, find a home for those deals within your referral network. Not only does being a person who always says “yes” deepen clients’ trust in you, it helps your referral partners, who could likely return the favor when they encounter deals that require your skills.
3. Be valuable to your peers.
Your inside market knowledge doesn’t just make you helpful to clients—it also can help you deepen your relationships with other professionals. Be proactive about sharing your professional insights with attorneys, accountants, financial advisors and fellow investment bankers without expecting anything in return. While respecting client confidentiality, you could provide a valuable view into company valuation, factors that influenced deal terms and even the counterparty’s logic during negotiations.
Authenticity is crucial. If you approach knowledge-sharing with no preconceived agenda, what might otherwise come across as forced or awkward can instead become an ongoing exchange that benefits both sides. Ask your peers how your insights help them do their jobs better. Their answers can help you refine your own storytelling.
When peers view you as a credible source of information, they start looking to you with questions where your perspective might be helpful. This can lay the groundwork for future referral prospects.
4. Stay open to cross-selling opportunities.
Since businesses only need investment bankers’ skills during occasional major events like a merger, an acquisition or a recapitalization, bankers don’t have the same regular cadence of client interactions as an attorney, an accountant or a financial advisor. Regardless, it’s important to be thinking of the big picture.
Go into client meetings with the mindset of being part of a team, even if you don’t have strong relationships with other advisors yet. Take note of any client needs where another professional’s skills might be helpful, then establish a conversation with those peers to communicate those needs, using discretion to protect client confidentiality. Offering a new piece of business is an excellent way of introducing yourself. Many advisors will welcome the gesture, and some may reciprocate if given the opportunity.
Boosting deal flow is a long-term goal. None of these tactics are likely to produce results overnight. A referral network is built with countless small decisions: sharing a success story, passing along an opportunity that didn’t fit your model, offering insight to a peer for no other reason than to be helpful. Over time, these small acts can earn you a reputation as a person who’s trustworthy, knowledgeable and skilled.
The investment bankers with the healthiest deal pipelines are often viewed as problem-solvers as much as they are dealmakers. They see to it that every problem that comes their way gets solved, even if they’re not the ones personally solving it, because they always know the right person to call. By investing your time in building a solid referral network, you can ensure that your expertise is always in demand.