Maybe more than anything, an investment banker’s level of success depends on how well-connected they are. Bankers who develop a wide network of referral sources can stay consistently busy on deals that utilize their abilities at their highest level and generate success fees. But establishing and maintaining the necessary investment banking deal flow requires constant effort, requiring investment bankers to not just do an exceptional job day in and day out, but to dedicate time to awareness-building and proactively strengthening relationships with professionals who have complementary specialties.
Here are four key areas where investment bankers can improve their investment banking deal flow.
1. Build awareness of your specialties.
Every investment banking professional has an area where their talents really shine, be it a particular subset of the market, businesses of a certain size or deal situations with specific complexities. But being great at your job isn’t enough to improve your deal flow or deal origination — you also have to get the word out to prospective clients about what problems you’re good at solving.
Demand generation for investment bankers follows the same steps as for any other business. First, get clear about what you have to offer and how it meets the needs of your client base. Then, begin educating your audience in whatever medium resonates most with them (such as videos, podcasts or written articles). Doing this consistently over time helps to build trust, create awareness and establish your brand.
2. Know what works economically for you and what doesn’t.
Normally, investment bankers are relatively open with clients about what situations they can help with and what they can’t.
If you’re looking to fill your sales funnel, though, we’d suggest a different investment banking deal flow strategy: Know your own economics cold, but don’t necessarily share that information with prospective clients. Understand exactly which types of deals are in your economic wheelhouse, and be a disciplined businessperson by not taking on anything that’s going to be shaky in terms of profitability, but importantly also find a home for the referrals that are outside your area of expertise.
If you know the level of revenue you need to earn and how much working capital you can reasonably invest given the likelihood of the deal closing, then you can make an informed decision to either take it yourself or refer it to someone else.
By finding a way to say “yes” to everyone, you condition your prospects to view you as a resource for any problem, even if you can’t help them directly. Build out a network of dependable referral partners and send them any opportunities that don’t fit your model. The best of those peers will return the favor when they encounter situations requiring your expertise.
3. Always look for ways to cross-sell.
Every business has ongoing needs from specialists who provide legal, financial, banking and, for owner/operators, personal wealth management advice. Normally, the services of investment bankers are only needed periodically when there are big, transformative events like a merger, an acquisition or recapitalization.
Although your professional counterparts are advising on a different cadence than you, it’s important to embrace the idea that you’re a part of a team, even if others don’t recognize that. In any interactions with a client, always be taking mental notes of any needs that might require the expertise of another provider. By opening a dialogue with your counterparts to discuss those needs, you strengthen those relationships and potentially expand your referral network.
4. Wow your peers.
It’s a given that you want to wow clients with your service quality. However, because most founder-owners only sell one business in their career, even your best efforts may rarely result in repeat business from them.
That’s why you should also focus on wowing the rest of the deal team with your creativity and capability for value creation. If your colleagues remember you as being good at your job and easy to work with, they can easily recommend you for future deals they work on.
During the negotiation process, you can even make a positive impression with the folks across the table, even if they’re not overly pleased with the outcome of an investment banking deal flow. Of course, the nature of negotiation is that you want the other side to find themselves in a position where they want to get the deal done and end up paying fully for it. Ideally, you want them to respect you because you contributed to a smooth process by being honest, highly professional and organized.
How Oaklyn Consulting helps other investment bankers’ deal flow
At Oaklyn Consulting, we know exactly what we’re good at and where we can be most helpful. We specialize in lower middle market deals that don’t fit into other investment bankers’ business models, often because they’re too small, too uncertain or too complex.
We’re not in competition with other investment bankers. In fact, our “hourly investment banking” model serves an unmet need in the market, allowing other investment bankers to stay focused on deals that benefit them most while preserving their value to clients as problem-solvers.
If we can be of assistance to you or somebody you work with, we’d love to discuss it further.
