What made the difference between success and failure in the last year?
2020 changed everything. Finance was no different. Dealmaking in 2020 split into two parts: the first half cratered at $971bn, with a 6.6% year-on-year decline by value while deal count was down 15.5%. Contrast that with the second half of the year, with the most dealmaking activity since 2007 at $2.2tn of overall M&A activity.
We know from the 2007-2008 financial crisis that economic downturns don’t mean the death of deal-making. In fact, companies that made significant acquisitions during an economic downturn outperformed those that did not, according to Harvard Business Review.
We believe that one of the biggest keys to their success is the executive vision and support that leads to a marriage between the business and technology teams. The imperative? Innovate fast, and at scale. As we ride the wave into 2021, it’s clear that firms with a few key characteristics tend to win more often:
- Those with strong tech stacks are well-positioned for flexibility and to take advantage of a market rebound quickly
- Focusing on delivering value to clients outperforms even in a downturn
- High-performing teams have strong leadership that unite around a shared vision, powered by transparency and accountability through data
- The best investment banks leverage the power of relationship capital to drive deals
The top 5 trends shaping investment banking today
Over the last decade, Silverline has helped 40+ investment banks unlock the power of the Salesforce platform. More than 10,000 bankers in 25 countries are using apps to manage their relationships, pitches, and deals. We’ve had a front-row seat to watch how some of the most high performing teams in the world operate, and how technology can create a competitive edge that sets them apart from their competition.
Here are the five top trends shaping the world of investment banking today:
1. Using first-party data to hack growth
Many investment banks start their journey with technology early on. By the time a firm has a small group of corporate finance and M&A managing directors sourcing business, the firm begins to get thousands of looks a year at deals that may be of interest. Keeping track of all these relationships and companies becomes a challenge almost immediately, and the extent to which the firm tracks all of its financial insights becomes the competitive lever for entry into and dominance of certain industries, sectors, and niche markets.
Your power lies in your own first-party data.
The key relationships each banker has, and the matrix of relationships networked across industry groups, product groups, and financial sponsor coverage teams, make up your greatest technological asset.
That’s because with the right data, technology can power smart (and automatic) creation of new relationships and contacts, as well as analyzing calendar meetings, email traffic, social media connections, and more to create a rich tapestry of relationships.
Who said yes to a critical deal meeting? Who is asking about portfolio strategies, and who wants to talk about acquisitions? Who else is attending an industry event that your team should get tickets for?
2. Leveraging relationship capital to source new opportunities
Investment banks capture mountains of proprietary first-party data about relationships, company financials, industries of interest, deal multiples, expected bid ranges and more. Through rigorous analysis, firms then use these data points to drive insights and inform top line growth strategies. While operating partners and senior managing directors may argue the relative value of these datasets and how useful they are in assigning staffing placements or extracting maximum deal value, there are many ways to measure the size and engagement of an investment bank’s network.
Organizations with strong governance around enterprise relationship management rigorously track each of these groups of deal influencers, and leverage technology and automation to help dealmakers and coverage officers set their own stay-in-touch reminders, power industry mailing lists, fuel social strategies, and promote the value of their relationships over time.
The focus then becomes less about individual transactions and more about the long-term goal of building relationship value. This paradigm shift creates generational growth and impact.
3. Big data is getting bigger
So many of our clients have begun their digital transformation programs with data lake or master data management (MDM) architecture on the roadmap, and with good reason. When an investment bank can operationalize the data captured about its key clients and business relationships, the resulting mountain of data becomes a rich mining source to uncover client insights, establish new market strategies, and expand to new products.
Beyond the need for first party and second party data integrated at the ready, bankers can identify new deals and save enormous amounts of time spent doing data entry — and time spent keeping it up to date — when third party market data sources are integrated to Salesforce.
Our experience with integrating to market data providers ranges from complex data lake infrastructures to simple API integration utilities like EasyAPI that help bring market data on to the Salesforce platform fast. These integrations help bankers visualize their relationship and deal data alongside what is happening more broadly in the market, including:
- Company demographics and financials
- Company and institutional hierarchies
- Contacts, relationships, board members, professional associations
- Funds and portfolio investments
- M&A news and transaction history
4. Firms getting martech curious
Many of the firms we work with saw 2020 as a year of reckoning for their marketing strategies. Disruption from COVID forced M&A and corporate access professionals to rethink their approach. What are the risks, and where are the major opportunities to holding events online and launching digital marketing strategies? Can information be securely shared and relationships effectively built on an all-digital platform?
By leveraging intelligent marketing automation tools to distribute high-value content pieces to their audiences, banks can collect far greater data about client and prospect engagement, including a deeper understanding of who is actively engaging with them on social, on webinars and analyst calls, and more. For example, event engagement data from systems like MeetMax, CVent, and Zoom is layered into Salesforce so that a banker can quickly and easily tap into 360-degree relationship insights; it is easy to imagine a future in which the research reports that a private equity dealmaker reads are nearly as indicative of interest as the good old-fashioned call notes the banker might record.
5. Accelerate deals with the power of AI and predictive analytics
What you need to make sense of all of this first-party, second-party, and third-party data (and the potential implications for the rest of your organization) is the right kind of AI and predictive analytics. As technology has advanced over the last decade, investment banks are beginning to harness the power of AI and machine learning to get proactive alerts when their professional networks change.
Robots aren’t here to replace the role of Managing Directors or executives, but what they can do is accelerate the pace of deal-making and make it faster and easier for your team to get the information they need, when they need it. With high-pressure deals, eliminating human error on complex contracts, automating the signature process, or simply ensuring that meeting scheduling is seamless, AI and bots offer plenty of value for investment banks.
Many of the banks we have worked with over the years have begun to leverage 10+ years of data on the Salesforce platform to look at predictive bid ranges and spreads, to inform deal team staffing with an eye towards maximizing success fees and minimizing time to deal close, and to surface real-time trends about client and sponsor behavior through tools like Einstein Prediction Builder, Einstein Discovery, and Tableau CRM.
The possibilities are endless…
- Einstein Discovery: Spot trends in deal multiples, emerging industries, and geographies
- Einstein Voice Assistant: Dictate deal updates, log meeting notes, and assign follow up tasks or notifications to colleagues
- Einstein Activity Capture and Contact Capture: Automate data entry for contacts and meeting notes
Harness the power of your data with help from Silverline
As we reflect on our work partnering with investment banking clients to develop their digital transformation roadmaps, we are encouraged by all the ways that firms are investing in developing their technology capabilities.
As firms look to build their analytics and data science capabilities in order to better monitor and interrogate their portfolios, Silverline takes its role as expert service provider very seriously. It is our goal to provide industry insights and expertise in emerging technical domains, and pragmatic recommendations on how to realize fast results. The long-term client relationships we most cherish are rooted in the practice of collaboration, which helps us to imagine and execute new ideas for technology that drive advantage for dealmakers and investors.
If your investment banking firm needs help with operational strategy, planning for your portfolio integration initiatives, or building your data and security roadmap, Silverline is here to help. Our team of experts are ready to build value for your organization and would be glad to have a discussion about where your firm currently stands. No matter where you are in your Salesforce journey, we can help you find your way forward.