Investment banking has always been a relationship-based business. While relationships have remained a constant in the industry, how those relationships are built and maintained has continued to evolve. Technology, and relationship intelligence specifically, is continuing to change how relationships are managed in the current M&A climate by supporting hybrid working relationships and making global communications and relationship building easier than ever.
From lockdowns to explosive growth to “normalcy”
While the industry had to pivot to new ways of communicating throughout the shutdown in 2020, the foundation of what makes a bank successful never changed. Major players in the industry started to adapt new ways of building relationships and turning to technology—from video conference calls to relationship intelligence platforms—to close deals.
Remote culture served as a massive growth accelerator for both teams and digitization efforts. Teams became faster and more efficient and were able to accomplish more in a fraction of the time. Many people made themselves available 24/7, and the new remote work culture created the perfect storm for 2021’s explosive M&A activity. Without having to schedule an in-person meeting, deals were closing faster than ever.
Adapting to banking’s new hybrid market
The experience of virtual meetings and closings is here to stay, but we've seen some in-person meetings return in 2022 as M&A deal volume has normalized.
The post-lockdown rebound has happened faster than some firms were prepared for, however. Leading investors are now using in-person meetings to differentiate themselves. Things they were doing in 2019—booking a flight to attend an in-person meeting and shake some hands—are now seen as going the extra mile.
Having the right technology to adjust to hybridization has helped support the transition and helped teams maintain their most important deals. Relationship intelligence is giving teams the ability to explore lucrative opportunities within their own network. Meeting and email volume (as well as network growth rates) have slowed as bankers have turned to their existing networks to maximize the return on their time spent building relationships and fulfilling mandates.
An increasingly global M&A market requires more specialized tools
We’ve seen a greater geographic distribution of activity across capital markets—from M&A to fundraising and IPOs—around the globe as more firms continue to expand distributed teams. While companies used to be clustered around certain geographies, they’re now being built, managed, and sold globally. And these interactions are being facilitated by technologies enabling broader and more accessible professional networks.
As a clear example of this expansion, Europe’s 37.4% YoY increase pushed Europe past the U.S. in M&A activity. This is partially because tech-focused private equity funds, primarily in the US, are now able to turn to Europe to find a better value.
These funds and other companies are opening offices throughout Europe to find attractive assets without paying eight to twenty times revenue on an entry multiple to get into a quality company. More access to these relationships has also increased access to more buyers which typically results in mandates closing more quickly.
Maintain dealmaking momentum by capturing and using data more effectively
With more buyers, more countries to operate in, and more relationships to maintain than ever, firms are drowning in useful but enormous datasets. Digitized versions of manual tools can no longer keep up with the influx, and relationship intelligence is giving firms a competitive edge over teams that are stuck in spreadsheets.
Relationship intelligence technology allows people to leverage more meaningful connections, no matter where their business is located or what asset classes they manage. The most forward-thinking firms should be focused on relationships and finding technologies that enable them to spend more energy on building those relationships from anywhere in the world.