Content is King, but Context is God. — Gary Vaynerchuk
His quote struck me because while he was talking about marketing, the idea is equally true about M&A dealmaking.
Replace Content with Business Model and Context with Equity Story and you’ll understand why we (M&A dealmakers) exist.
Our value lies in increasing a deal's probability, velocity, and scale by creating context.
Let’s be clear on this one :
Businesses with high perceived value do not need dealmakers.
However, from my experience, perceived value is highly hype-dependent. Today, Vertical SaaS is a hot topic among the VC community, not five years ago.
We managed to increase a business' perceived value by creating context.
Context is defined as the circumstances and facts surrounding a situation.
In dealmaking, context is the art of positioning business assets.
If not done correctly, it doesn’t matter how good or bad your assets are. No one will consider them, except the hype businesses, of course.
In other words, we create a frame surrounding business assets and provide resources for appropriate interpretation.
In doing so, we can reveal hidden values beyond the balance sheet. Some people call it goodwill.
But how do we do that?
Mostly by :
Telling stories based on assumptions rooted in market dynamics Making connections between people sharing the same story Creating experiences by leveraging opportunity costs.
Seems simple, right?
We tell stories
Stories framing your business model against market dynamics we (you and us) believe are essential.
By understanding market dynamics, we manage to build a strong “Why now?” frame.
Because nobody wants to invest time or money into an old deal, we explain how specific market trends have briefly opened a market window.
Your equity story must come from a pattern of market forces you recognized, seized, and are now leveraging.
The more ground knowledge, the better.
We connect people
People also believe those market dynamics mentioned above are essential.
Human beings tell themselves stories. As far as we are concerned, those stories are entirely trustworthy, and it isn’t very reasonable to try to persuade them.
You can’t get someone to do something they don’t want to, and most of the time, what people want to do is take action (or not take action) that reinforces their internal narratives.
Everyone always acts in accordance with their internal narratives.
We create experiences
Experiences helping buyers become who they seek: the undisputed leader, the one-stop shop, the first mover, etc.
When we show up in front of prospective buyers, it always takes the form of a promise:
If you invest in my client, you’ll get a calculated ROI with potential synergies.
At some point in the process, once we have a better understanding of how potential buyers dream, decide and act, we take it further:
If you don’t invest in my client, you’ll lose the opportunity to reach your long-term objectives faster with fewer execution risks.
It’s very effective because we leverage opportunity costs to convert interest into offers.
By framing my client as the only ones who can help them become who they seek to evolve, we are reinforcing the feeling that not investing is the most expensive option.
Repeat that with several actors and you’ll get a competitive process that gets a premium deal done and fast.
By now, you’ll understand M&A dealmakers are more marketers than brokers.
If you are more comfortable selling your product/service than your business; If you do not have the resources to organize such a time-consuming process; If you are not confident going through this stressful period alone, Definitely attract an M&A dealmaker by your side.
But more a marketer than a broker.
Thanks for reading!