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Successfully Managing Inbound Investor and Banker Inquiries

Published August 2021


In today’s competitive deal sourcing market, you likely receive many unsolicited emails and LinkedIn messages from private equity funds, strategic acquirors and investment bankers seeking a ‘transaction opportunity’.

Tech-service and software businesses in Evolve’s primary sectors (insurance, capital markets and lending) have experienced a significant uptick in such activity over the past 3 to 5 years, and there are no signs of it slowing down.

This activity means more emails, more calls and more messages. But this isn’t necessarily a bad thing.   By shifting your perspective and seeing each of these connections as a potential win, they no longer seem so tiresome. By learning how to leverage these leads to your advantage, they may be useful in generating new business, gaining insight into competitors or helping prepare for your company’s sale or recapitalization. To achieve this, one must prioritize, respond, and leverage enquiries.


Evolve Tip #1:   Business Contacts Present Opportunity

Many companies feel inundated with meeting requests from investors, strategic companies, and bankers. However, these requests can be turned into opportunities. Even though a contact’s original intent is transactional, if you’re clever, you could parlay the contact into:

  • an introduction to a potential client;
  • a connection to large strategics or investment funds in the space;
  • a relationship to drive business development initiatives; or
  • an opportunity to gain information on the competitive landscape (e.g., industry knowledge and transaction data)

At Evolve, our outbound efforts often result in companies developing meaningful relationships with potential customers, gaining an informational advantage in the process. For example, earlier this year, Evolve introduced an Insurance Technology firm to an established industry participant that resulted in a successful joint venture. In this example, Evolve’s insurance industry connections helped seal the deal on a synergistic relationship.

That being said, not all contacts are equal. Successfully vetting and prioritizing inquiries is a must, in order to not risk wasting time on dead-ends.

Inquiries can normally be categorized into four broad buckets:                                          

  • Private equity investors
  • Strategics
  • Investment banks
  • Lawyers

The quality of these contacts varies widely and is most often based on their sector and product expertise. Remember, although a contact may seem irrelevant right now, it may be very useful in the future. For example, a strategic acquiror may offer partnerships and access to their expansive infrastructure and distribution network, but your business isn’t looking at a partnership at this time.  But what about in the future?


Evolve Tip #2:  Build Your Strategic Network

Even if your company has no interest in a transaction right now, building a network of informed, connected individuals is always an excellent strategic move.

Quality inbound inquiries can be converted into an asset. Investment banks, venture capital firms, and private equity groups maintain expansive networks and an introductory Zoom call should always be viewed as a business development opportunity. Interest from these groups can lead to connections with other businesses in the space or even help you find strategic hires. Knowledgeable contacts can also offer a comprehensive overview of the competitive landscape and market activity.

Whether or not your company is ready for M&A or a capital raise, developing a tight group of prospective advisers and investors offers significant benefits (at no cost to you) as your business grows. Try developing a core group of interested contacts who offer unique industry advice and touch base with them every 6 to 9 months. Then, should the need for a transaction emerge, you are poised and ready to go.


Evolve Tip #3:  How to Find Quality 

Most investors who reach out to you will be private equity, venture capital or growth equity groups. If your business is in its growth stages, where an exit isn’t on the horizon, prioritize  groups with complementary market expertise and industry knowledge.  That being said, always bear in mind that if a transaction is required down the road, being on these groups’ radar makes things much easier.

Inbound inquiries from groups with a broad focus – such as search funds, finders, fundless sponsors and generalists – requires that you be more selective.

For example, Evolve maintains a strong relationship with a fund that only targets insurance billing companies that fit its highly specific criteria. By being so focused, they often edge out competition, because of their expertise.

Investment banks can vary as well, from unfocused generalists and run-of-the-mill brokers to highly specialized boutiques with deep industry connections. While generalist banks offer a transaction process backed by years of success, specialized banks often maintain detailed knowledge of your industry, that you can benefit from.

As an example of this, Evolve reached out to an emerging InsurTech firm that was focused on visual AI solutions for claims management. They were connected with an established company in their space after it was decided that they were a good strategic fit. This resulted in a key partnership between the two parties.

Another source of outreach are strategic companies that are in your industry (they may even be competitors). This type of outreach – from a corporate development team at a large strategic in your space – might offer opportunities for resources and growth and should be considered.

Smaller or under capitalized companies may offer opportunities for business development through introductions or providing valuable information on industry trends. But be wary of non-serious buyers who might be trying to use you for proprietary information.

Lawyers are a less common source, but still may approach you as potential advisors to a transaction. Smaller firms may be more personable when gauging interest in a transaction but might lack the sophistication and experience that larger white-shoe firms offer. Both types may serve as a valuable resource, before and during an engagement.

You should not rule out all ‘low quality’ inquiries, but exercise caution in order to avoid wasting  time with non-focused contacts.


Evolve Tip #4: Following Up                                     

After you’ve combed through your inbox and have decided which contacts appear promising, it is time to follow up and arrange an introductory conversation. This conversation will help you vet for quality and fit.  Even the most promising contact could be a mismatch for you if their transaction process does not match the scope and size that makes sense for your business.

By following up with a conversation, even if they turn out not to be a good fit, you can still leverage them for insights into your industry as well as introductions to industry contacts.

If, from your conversation, you determine that the fit is good, further conversations can be arranged.

As you work your way through your Inbox, consider quality, fit and match. If you determine a message is from a ‘low quality’ source, before deleting, ask yourself if there is anything you may gain from a conversation, such as industry information, market activity, or the off chance they may be useful at some point in the future.  That being said, while ‘low quality’ contacts may prove useful, most of your effort should be spent on higher quality contacts that are more likely to become assets for your business.


Traits of a High-Quality Contact

  • Track record of successful transactions in your industry
  • Selective with transactions with a definite size range and industry focus
  • Access to resources and connections to assist in all or most aspects of a transaction
  • Provides meaningful insight into the competitive landscape of your industry
  • Fully understands the drivers of your business within your industry

If you connect with a high-quality contact that is a good fit but you don’t have any immediate needs for their services, ask for a follow-up in 8 to 12 months. This signals that you are interested, and it means the contact will feel comfortable approaching you should something arise. If you are considering a transaction in line with what they offer, schedule further conversations to discuss your specific needs and what options are available to you.

This post was inspired by an article about strategies for processing emails from Aaron Klein, CEO of Riskalyze.