Creating the “Billions" Impression to Prospective Buyers

I’m a big fan of the Showtime series, Billions . It’s an over-the-top, testosterone-charged soap opera centering around two alpha males, one of whom is the founder of a wildly successful hedge fund.

Everything about the ultra-modern headquarters for Billions’ asset management firm, Axe Capital, screams wealth, innovation, energy and success. Any pension fund manager coming in for a pitch would instantly feel that every square inch of this office space is devoted to generate maximum alpha.I don’t always get a similar impression when I visit some of the offices of boutique asset managers that are considering selling to or merging with larger companies. My admiration of their leaders’ performance results and intellectual capital is often tempered by their lack of commitment-intentional or otherwise-to presenting an image of success and innovationin their digital and brick-and-mortar storefronts.

A typical issue among young firms

When firms are in a startup phase, money is often tight. They’re often forced these to lease cheaper office space in less-desirable locations. They’ll avoid extensive renovations, buy second-hand furniture, and minimize marketing-related expenses by doing as much as they can in-house.But when a firm decides it’s time to join or sell to a larger company, these shortcomings often catch up to them. A suitor isn’t just buying personnel and AUM; they’re getting everything else that comes with it. And unless every member of your investment team has Warren Buffett-level name recognition, you can’t afford to make a bad impression when a buyer stops by for a virtual or on-site visit.But it’s not only brick-and-mortar deficiencies that turn off potential buyers. An outdated online presence and off-putting sales and marketingmaterials can scare them away even before they step foot in your firm. Here’s an example.

Top-notch product, subpar marketing

One boutique firm I know well has a Billions-quality headquarters. And its key product fills a specialized investment niche that could turn any buyer into into a category killer in that asset class. The problem? It’s a complicated strategy that’s difficult for investors to understand, and the firm’s inattention to marketing hasn’t helped.The firm’s web site looks like it hasn’t been updated since the pre Y2K era, with a text-heavy home page, head-scratching navigation and scores of dead links.The firm’s sales and marketing materials are no better. Pitchbooks alternate pages of overlong bullet points in tiny typefaces with crowded, indecipherable charts. Product fact sheets look like they were produced by an intern using a mid-90’s version of Microsoft Word.Is it any wonder that, in spite of its spectacular performance, the company has barely expanded its range of clients beyond friends and family over the past decade? What purchaser is going to want to take on this firm’s business developmentwoes?

First impressions count

While strong performance, products and personnel will get suitors interested in your firm, they’re unlikely to close the deal if your digital and physical headquarters make a bad impression.When my clients ask me what they can do to cost-effectively improve their public image for a potential buyer, I generally offer three suggestions. 1. Honestly assess your firm’s strengths and weaknessesAny buyer will certainly be conducting extensive due diligence on your firm before they walk through the door. That’s why it’s important for you to anticipate the tough questions they’re likely to ask. Put aside your ego and conduct an extensive analysis of your products and strategies to learn how your strategies compare to those of your comparable actively and passively managed peers in terms of performance, compliance and risk management, governance, expenses and inflows. If possible, compare your findings to analysis from Morningstar and other independent researchers.Once you’ve done this analysis, use your findings-both positive and negative-to coach the people who will likely be interviewed by potential buyers. You may even want to create a document that distills the results of your analysis and present it to buyers. They’ll appreciate your honesty.And if you don’t have the resources to conduct this analysis and coaching on your own, hire an M&A evaluator who specializes in asset managers to do it for you. 2. Get your marketing act in orderConduct a thorough review of your online and offline marketing materials and redesign and rewrite them to reflect visually dominant and copy-light standards. If you don’t have the time or budget to re-do everything, prioritize those that make the most impact, such as your home page and site navigation, your product performance pages, your management team bios, your pitchbooks and your investor-facing product fact sheets and manager commentaries. Redesigning “business as usual” communications such as prospectuses and shareholder reports can wait. 3. Orchestrate buyer walkthroughs to the letterWhen a potential suitor comes for a site visit, you want to make sure that every employee’s activities create the impression of energy, productivity and professionalism. You can achieve this by making sure everyone knows what’s expected of them before and during the visit.
  • Key members of your investment, operations, compliance and business development teams should be in the offices, ready to answer questions even if they’re not formally meeting with the suitor.
  • Whether they’re staring at trading screens in their cubicles, pitching investment ideas in research meetings, every member of your investment team should be doing something that makes them look like they’re involved in generating alpha.
  • Other employees should be involved solely in work-related activities. Keep Smartphones locked away in drawers and break-rooms empty when potential buyers are in the building.
  • Of course, in an ideal world all of your employees should be doing these things anyway, but since (hopefully) all of them will keep their jobs if your firm merges with another, it’s in their own best interests to create a winning image that may help seal the deal.

    Staging Your Success

    Marketing your firm to a potential suitor is like selling a house. Descriptions and numbers may pique bring them to the door, but if they’re turned off by what they see during a physical or virtual walkthrough they’ll move on to the next property. Fortunately, you don’t need to have the budget of Billions to make a winning impression. Sometimes spending smart to fix the deficiencies that matter most is all it takes.Related: The Yellow Brick Road Towards Thought Leadership