Improve Deal Flow: How Private Equity Firms Should Share Their ‘Sweet Spot’ With Sellers

Deal Sourcing Improved by Sharing Investment Criteria with Sellers

(From left to right) David Mahmood, Chairman & Founder, Allegiance Capital Corporation; Bruce Cameron, Chief Executive, Berkshire Capital; Ulrich Schneider, Partner, Proventis Partners; Tim Page, Managing Director, Whitehall; Martin Stein, Managing Director & Founder, Blackford Capital

Buyers want quality deal flow, but too often sellers don’t have a good sense of their investment criteria.

In fact, these days “private equity firms all sound alike in what they are looking for,” said Allegiance Capital chairman David Mahmood, during a recent Navatar roundtable on “Why Buyers Must Redefine Their Intermediary Deal Sourcing Strategy.”

Given that boutique intermediaries control access to a majority of transactions in today’s deal market, buyers need to build relationships with a large number of boutiques. At a minimum, they have to make sure all these intermediaries know about their current investment strategy, so that bankers and others can channel the right investment opportunities to them.

Here are some of the approaches that buyers commonly use:

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Private Equity Fundraising: Seven Things You Didn’t Know About Working With Placement Agents

Private Equity Fundraising Software on Salesforce

Panelists for Roundtable: “What Every Alternative Asset Manager Should Know About Working with Placement Agents.”

They walk the fundraising trail hand in hand. They may have known each other for years. And they rely on each other for continued success. Nonetheless, there are a few things about placement agents that alternative asset managers may not be aware.

Following the popularity of our best practices guide on hiring a placement agent,  Navatar hosted a roundtable last week featuring a group of placement specialists and an in-house investor relations director to discuss “What Every Alternative Asset Manager Should Know About Working With Placement Agents.” Seven things emerged from the conversation that may surprise GPs.

1. Agents think your fundraising schedule is too optimistic

GPs took an average of 17 months to close a fund in 2015, according to data provider Preqin. Fund managers hear that number and anchor their own fundraising timelines around it. Like drivers, the majority also believe they are above average and so expect to beat it. But the mean is the wrong starting point, our placement agent panelists argued. Larger funds that LPs tend to clamor for are believed to be weighted more heavily in the mean. GPs may also have their fundraising perceptions skewed by the trade press, which is more likely to cover lightening quick fundraises then they are the more common two year slog.

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Four Simple Tips for Private Equity Managers to Calculate Digital Marketing ‘ROI’

CapX Partners Eric Starr Uses Navatar for Private Equity Marketing Finance folk are known for their financial modelling prowess and ability to forecast returns. But private equity and other fund managers have not always taken that strength and applied it to their marketing efforts.

That is a mistake. But fortunately an easily fixable one.

Recently, CapX Partners’ Eric Starr (see pic) delivered for us a convincing presentation on the power of newly available marketing techniques born out of today’s technology. In the webinar, “Moving Beyond Coffee: Unlock Deal Flow with Digital Marketing,” Eric made a powerful case for the marketing value of content-rich websites (including using blogs), a conscious SEO strategy and targeted e-marketing campaigns. Equally important, though, is the ability to measure the impact of these efforts.

“Otherwise how do you know that it’s all worth it?” Eric rhetorically asked his audience.

GPs that can calculate the “ROI” of newly implemented digital marketing efforts can set clearer performance targets for deal origination staff, monitor the effectiveness of one strategy over another, and present hard numbers when convincing leaders at the firm of its value during budgeting time. And it doesn’t take all that much effort either. During the webcast, Eric provided a few basic pointers to get started:

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Three Reasons Why LPs Are Finally Playing Catch-Up to Tech-Savvy Asset Managers

Cloud Computing Gives LPs Faster Technology for Better Portfolio Monitoring

 

 

 

 

 

 

 

 

It didn’t make headlines, but the news is a major development in the alternatives sector nonetheless. A large majority (83 percent) of limited partners (LPs) have either recently upgraded, or are planning to upgrade, their back office monitoring technology, according to a recent Coller Capital survey of LPs.

That type of stark departure from the status quo warrants some explanation.

For different reasons, LPs have been slower than GPs to embrace new technology. Public pensions are hesitant to spend tax payer dollars on new systems while smaller investors such as family offices and endowments tend to have less room in the budget for tech upgrades, even if it means savings in the long-run. As capital providers, LPs are also under less pressure than GPs to reap efficiency gains and savings from new technology in order to remain competitive.

So what’s changed? Three key trends explain the situation:

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Webinar: Moving Beyond Coffee – Unlock Deal Flow with Digital Marketing

Blogging as Part of Digital Marketing Leads to Proprietary Deal Flow

Do you blog? If you’re a private funds manager, the answer is probably no. But that may be a mistake.

On Tuesday, CapX Partners’ Eric Starr delivered for us a powerful presentation on the value of digital marketing. Eric hammered home the point that GPs must embrace SEO, mass email campaigns and slick websites or risk losing deal flow. Navatar Private Equity, for instance, was mentioned as his central platform to monitor the success of e-marketing campaigns and then manage communication touchpoints after converting leads.

This upcoming Tuesday, Eric is providing a second opportunity to learn how fund managers can fully leverage the value of digital marketing. You can register here.

But even though more and more investment firms are cementing digital marketing strategies as part of their deal origination efforts, the lowly blog is receiving less love. The webinar will urge managers to view content as the foundation of their digital marketing efforts, with blogs as one crucial layer of that marketing bedrock. As a teaser, allow us to provide three reasons why in advance of the show:

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Amid Performance Woes, the Hedge Fund Industry Wisely Turns to Investor Relations

Financial CRM May Help Hedge Fund Managers with Investor Relations and Fund Performance

The hedge fund industry is facing something of an identity crisis at the moment. Slumping performance figures and investor revolt against the standard “2 and 20” fee model is forcing a shakeout: 291 hedge funds shuttered in the first quarter of 2016, offset by only 206 new funds started up, according to fresh data from Hedge Fund Research. Last year saw the most closures since 2009.

Survivors of the fallout are asked to slash costs and explain again how they outperform the market net of fees. Over the past five years, hedge funds provided investors a measly 1.7 percent return, according to the HFRI Fund Weighted Composite Index. Had that money been invested in the S&P 500 instead, the average annualized return would have been 11 percent.

If things don’t improve, expect more hedge fund outfits to struggle during fundraising. Already the $300 billion California Public Employees’ Retirement System (CalPERS), seen as both a bellwether and pacesetter for other institutional investors, has left the sector. Other big-name investors, including MetLife, American International Group and the New York City pension plan are reportedly set to do the same.

Which makes the timing of a new release from the Alternative Investment Management Association (AIMA) so important. Last week, the hedge fund trade body published an investor relations best practices manual that touches on everything from pre-meeting planning to on-boarding procedures to crisis management. The guidelines are only being made available to AIMA members, but a scan of its executive summary hints at just how much thought and effort went behind its creation.  Continue Reading →

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Three Basic Mistakes That Can Derail Cloud Software Adoption

Cloud Computing Best Practices for Salesforce for Financial Services Industry

The great news for customers of a Software-as-a Service (SaaS) product is that the vendor is incentivized for your success, since you pay as you go. A good SaaS provider backs their product with a solid customer success program to make sure their customers use the product. That doesn’t mean customers will always be able to successfully use the product. Sometimes, lack of enthusiasm from the customers’ side can become a stubborn barrier to adoption.

I manage the Success Team at Navatar and I can proudly say that 95% of our clients are successfully on-boarded to our cloud platform. We see some common themes across the ones that don’t. Here are some of them:

1. Lack of leadership buy-in:

Change is difficult. If senior leadership is fully behind the rollout, they can generally push through the message to the entire team. We have seen scenarios in which adoption never occurred as it was not mandated. Most people continued to do their day-to-day tasks as a new product meant additional workload.

If senior leadership shows interest in the new product, everyone pays attention. It really works when management can set usage targets for employees. I have also seen quite a few of our customers give out usage awards, based on employee activity in the new system. The goal is for employees to recognize that the rollout is important to management.

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The Easily Avoidable Mistake That Private Equity Managers Break When Engaging M&A Advisors

How to Improve Private Equity Deal Sourcing

You would be forgiven for believing that most private equity deals are sourced independently given the amount of time fund managers spend describing their “proprietary deal flow”, a persistent industry catchphrase. In fact, it is intermediaries that are the biggest deal flow spigot. That’s truer now than ever – a trend not lost on investors, who now pepper managers with questions about their relationships with investment bankers and brokers during marketing meetings. Managers not very good at engaging intermediaries not only risk losing out on prize deals, but increasingly so capital commitments too.

So how can managers improve their outreach and relationship with M&A bankers?

It’s a question we posed to four of the best intermediaries in the field as part of a wider roundtable on deal sourcing strategies, a conversation co-moderated by Blackford Capital’s Martin Stein, who provided the conversation crucial buy-side perspective.

One key lesson emerging from the roundtable discussion is the importance of being responsive.   Continue Reading →

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Investor Relations Becomes the X-Factor in Alternative Assets Fundraising

Private Equity CRM. Hedge Fund CRM.Alternative asset managers have seen their ranks explode over the last several years, due to a perfect storm of low interest rates, strong corporate growth and increased bank regulation.  The number of active private equity firms has spiked 143 percent, while the number of active VC firms has rocketed  173 percent in the last 15 years. Due to all of this competition, differentiation has never been more important.

The best performing fund managers, surprisingly, are not the best fundraisers. According to Chestnut Advisory Group, good communicators outperform top investment performers by a ratio of 4-to-1 when it comes to raising new capital. The ability to differentiate and effectively convey your message to the right investors has become extremely critical to fundraising success.

Jane Morris, managing director with the private placement firm Liora Partners sums up the current state of private equity fundraising: “Fund raising is not a short term activity; it’s an ongoing, never ending process.  You are either actively seeking new investors, pitch book in hand, or you are laying the groundwork for your next fund raise.”

To effectively establish your brand with investors it’s important to maintain a highly focused, tailored strategy that connects with their investment goals.  This isn’t rocket science. Most fund managers already know what they need to do. The challenge typically is in the execution;  fund managers aren’t necessarily the best marketers.

In our work providing investor relations technology to hundreds of alternative assets firms, we have seen some common themes emerge.

Establishing Investor Relationships

Fund raising is not one size fits all. Funds need to identify their target investor population and understand investment profiles.  Their investment size, industry/area of focus, risk appetite, past investments, communication preferences, etc., are all critical. The information enables IR professionals to develop a very clear profile of what kinds of opportunities will resonate with different groups of investors for communication targeting. Continue Reading →

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Eight Questions That Alternative Asset Fund Managers Must Ask Before Hiring a Placement Agent

Placement agents are in vogue.  There are tens of thousands of money managers and alternative asset fund managers that are totally dependent on them. In 2015, more than 50% of private equity funds that closed used a placement agent, according to Preqin.

It isn’t hard to understand why. Fundraising requires an intense focus over 17-18 months, not to mention specialization, relationships and physical proximity. A fund manager devoting more time to the fundraising process has less time to focus on implementing the fund’s investment strategy.  Furthermore, placement agents have a much broader reach and more up-to-date investor knowledge than most managers could achieve without a large internal marketing/sales team.

What Private Equity & Real Estate Funds Should Look For in a Placement Agent

Placements agents range from specialized divisions of large brokerage firms to small and midsized independent firms. The larger firms work on six to ten fundraising mandates per year. Therefore, they prefer to undertake mandates that represent the ‘low hanging fruit’—a fund that’s easily marketable. Others are specialized based on certain asset classes, investor type, offerings, or geography.

To be successful, placement agents must leverage the intelligence from their previous mandates and track institutional investors and their investment preferences. Most of them use Navatar to manage multiple mandates and stay on top of investor activity.

We spoke to some of our placement agent customers to get their perspective on what it takes for a placement agent to succeed when working on a mandate.

Download this free eBook, “Eight Questions That Alternative Asset Fund Managers Must Ask Before Hiring a Placement Agent,” for the insights gained from these conversations.

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How Cascade Financial Advisors Became a Leader in Client Service Using RIA Cloud Technology

Salesforce for Financial Advisors and Wealth Management RIAToday’s ever more tech-centric world is changing the game for both clients and wealth managers. And client service is one of the key areas where the battle for a client’s wallet and mindshare is being waged.

“For us, client service and advisor service processes are really the most important and the most complex pieces of what we do on a day-to-day basis,” says John Van Sant, President, Cascade. “It’s also obviously one of the most time sensitive parts of our business as well, and a huge part of our value proposition.”

When Cascade, a boutique wealth management firm managing around half a billion, recognized that they wanted to differentiate by providing a better level of service to their clients, they decided to focus on accuracy, not efficiency.  John led the charge, with the goal  for a more consistent client and advisor experience.

“Like most small mid-size firms that are in the industry, we have five key functional areas- marketing, business development, investment management, client service and advisory service.  Like most medium-sized businesses, we’re obviously limited on resources when it comes to personnel versus some of the larger firms.  So in order to improve the effectiveness and efficiency most firms like us must have a fully integrated turnkey platform that integrates all of the different functional areas,” according to John.

Cascade picked Navatar One for Salesforce, as the hub for the turnkey platform, to help create connect all the functions.

The results? John Van Sant describes how Cascade built a model with consistent processes, as well as showcases exactly how key functions such client onboarding, service requests, client meetings etc, must function for an advisory firm, in this recorded webinar video.

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Upcoming Webinar: Don’t Lose the Deal – Proprietary Psychology is Different

In a forthcoming Webinar, the Exit, LLC Team  warns “Don’t Lose the Deal – Proprietary Psychology is Different.”  Exit, LLC is speaking to 800-900 founder owned businesses a month and is focused on finding new opportunities for their strategic buyers and private equity firms.

Their first tip is that you talk dramatically differently to a business owner than you would to an M&A firm.  Sure, you are eager to get answers but watch out, if the conversation starts sounding like an interrogation, you could irate your target and lose the deal.

Some of the things you will hear in the webinar are how to make the right first impression and how to figure out the best time to approach your target company.  They also have a lot to say about creating an origination strategy with the discipline and metrics you need to build a large pipeline and gaining more high quality opportunities.  The webinar is free and you can register for either session:

March 29, 2016, 10:00 am EST  - RSVP TODAY >>

March 31, 2016,  2:00 pm EST  - RSVP TODAY >>

 

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Johnsons Corporate Goes High Tech to Target 1000+ Buyers And Close M&A Deals in 5-8 Months

Mergers & Acquisitions Software

The Johnsons Corporate team pioneered the Six Stage Sales process that helps them systematically cast a wider net when seeking buyers for businesses. Thanks to their adoption of sophisticated M&A technology, Johnsons Corporate is well positioned to be a leader in Australian mid-market M&A, widening their targeting ability to more than 1000 buyers and closing each deal within 5-8 months.

When it comes to selling mid-market businesses, Johnsons Corporate doesn’t believe in taking shortcuts. The Johnsons Corporate Six Stage Sale Process, developed and refined for over 50 years, is based on the conviction that the sale and acquisition of mid-market businesses warrants a systematic approach to cast the net over a broader pool of prospects in more commercial and geographic markets than others would even contemplate.

In practical terms, the Johnsons approach translates into custom marketing campaigns to 500 to 1000 targets (as opposed to 30-40 targets that most corporate advisory firms work with), and it’s central to how they have been able to create a unique position in the Australian mid-market M&A marketspace. Continue Reading →

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The Future of The IT Bubble And CIO In The Age Of Cloud And Mobile

Salesforce for Financial ServicesThere’s something wrong with IT.

Most business people  are frustrated because IT can’t even understand their issues, let alone solve them.

“IT organizations somehow forget that people come before technology,” says Jonathan Feldman. “Like a raging infection in the corporate body, IT is continually at war.”  Feldman, a CIO himself, believes there’s something wrong with any department that seems to have a male dominance. It suggests an elitism, an anti-collaborative stance.

IT has long been tolerated as a costly but necessary line item, but that may be changing. Businesses are under pressure to deliver results and they have little patience for drama. They want IT to get its act together.

Is this possible?

No, says Feldman. “As with a dysfunctional relationship that needs to end before something really bad happens, I have a proposal: End it. It’s not working, folks. It’s super-dysfunctional, and we all know it.” Continue Reading →

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Multitenancy – The Odd Sounding Cloud Tech Term that Changes Everything for Financial Services Firms

Private Equity CRM

“Think of an ice breaker ship ploughing through frozen seas and that will give you some idea of what multitenancy is doing to the old IT model,” says Navatar CTO Rexlo Joe, who Salesforce recently featured as a success story.

Multitenancy is a architectural design in cloud systems, which allows the vendor to share resources between clients. It allows the vendor to eliminate mundane, repetitive tasks and focus their time instead on adding new features.

Not all cloud products are multitenant, though. A legacy vendor with an on-premise product never invests in multitenancy since that involves developing a completely new product and a new business model. It is much easier for them to turn their legacy system into a single-tenant product (each customer is hosted separately).

“If you’re not buying a multitenant product, you’re buying a product that will be frozen in time, while your competitors will always have the latest technology,” says Joe. Continue Reading →

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Public Cloud Provides Most Data Security For Financial Services Firms

Salesforce for Financial Services, Financial Services Cloud

Corporate IT continues to argue that public cloud security cannot be trusted. They believe, mistakenly, that they can keep data more secure than the public cloud.

“We live in a world where data center breaches are in the headlines almost monthly, much to the consternation of corporate IT — the same corporate IT that fears the public cloud due to fears around data security. The truth is that the public cloud is more secure than the typical data center, and IT would get better security if it got past its prejudice against the cloud,” says David Linthicum, in his recent article.

Look at the recent hackings of Ashley Madison, Hilton and plenty of others. I’m sure they all deployed IT security specialists and spent a lot in managing security. But it wasn’t enough.

Because IT manages its own data resources, it believes it’s doing a better job than other people might, says Linthicum — especially those people at those cloud services where security practices are opaque. But it’s simply not true. Cloud providers have better security mechanisms in place and are more paranoid — and attentive — to security risks throughout their entire stack. Continue Reading →

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Meg Green & Associates Describes How Financial Advisor Cloud Technology Helps Them Lead in Client Service at T3 Wealth Conference

Barrons listed top financial advisory, Meg Green & Associates, plans to dramatically grow beyond its Miami base.  At the recent T3 Enterprise Conference that we Financial Advisor CRM for salesforceattended, the firm’s president, Todd Battaglia, talked about setting the stage for growth while simultaneously improving customer service, the firm’s infrastructure and compliance.

Battaglia says he initially saw Navatar One, built on the Salesforce platform, as primarily a technology refresh to improve the user interface, upgrade security and business continuance.

“One year into the partnership, we realized Navatar One is more than a software, it’s a connected growth platform that’s taking the DNA of what we do as a firm and embedding it into a technology system to make us better at what we do,” he said.

According to Battaglia, Navatar One delivers dramatic improvements in three crucial areas for Meg Green & Associates: Continue Reading →

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How Financial Advisors Can Avoid Blowing Client Meetings

Advisors all share the same #1 priority: their clients. There is nothing they want to avoid more than to look bad when getting in front of clients. To ensure that client review meetings run smoothly, they, along with their staff, go through numerous time consuming steps that require attention to detail. Still, this is also a process where advisors commonly experience frustration and inefficiency.

In our recent webinar (see below), we covered this topic in depth.

There are several areas where advisors and their staff commonly experience inefficiency and frustration, but arguably the costliest activity is executing client meetings efficiently and effectively.  Nine out of ten advisors, including those using Navatar One, identify the client meeting process as the activity where they want to improve efficiency.

Here’s why:

-   Advisors cannot afford to screw it up. Being disorganized or erroneous when in front of clients can create distrust, convey incompetence, and ultimately lose clients.

-   There are often many tasks and detailed steps involved, often involving several people and multiple systems, which requires tight coordination and communication.

-   The average practice services 200-300 households. This equates to executing hundreds of meetings per year, which – when combined with the numerous tasks and required accuracy and attention to detail — results in the execution of client meetings being the highest percentage of staff consumption on an annual basis.

-   The frequency by which other activities are performed often pale in comparison. (Hint: compare how many meetings you had last year with how many new clients you on-boarded or how many service requests you handled.)

Read full article here.

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Alternative Assets Fundraising: Investor Relations Matters More Than Fund Performance

A strong track record of investment performance is always the most important factor for asset managers looking to attract capital: that’s what the conventional wisdom would have us believe. But a recent Chestnut Advisory study reached a very different conclusion. According to an analysis of asset flows and testimonials by institutional investors, performance is actually lower on the list of deciding factors.

What’s at the top? Effective investor relations.

Asset managers who establish trust through communications and support appear to be more successful at raising money than those who perform well but fall short in client outreach and education. In fact, 92% of institutional investors surveyed said that they consider IR to be integral to an asset manager’s mission. Those firms that lead on the communications front outpace IR laggards when it comes to retaining capital and leveraging client relationships as well:

The survey shows that trusted asset managers raise more assets, are hired more quickly and are fired more slowly than the general population of asset managers. They also have an easier time cross-selling and up-selling their clients. Continue Reading →

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Incoming. More stomach-churning volatility today means more worried client calls.

U.S. markets were down nearly 3% today amid continuing worries about China. When asked by Bloomberg TV to describe in a word what’s going on, James Bianco of Bianco Research said this: “Uncertainty and Fear.”

It looks like this latest round of market volatility may be with us for a while.

If you’re an advisor, check out our newest feature, VAX. The Navatar VAX Rating gives advisors and staffs a simple but effective way to capture and manage the real world, real-time anxiety levels of each client. Clients are rated as “highly anxious”, “somewhat anxious”, “somewhat resilient”, or “very resilient” to market volatility events.

This tool enables an advisor to segment the client base and personalize communications based on how reactive and fearful they are to market downturns. And our wealth clients tell us they are fielding lots of calls from worried clients right now.

We are also working on rolling out an institutional version of the VAX feature for hedge funds and other segments.

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Clients Look to Financial Advisors for Reassurance Amid Market Volatility

The precipitous declines in U.S. stocks and other global markets in the past week brought out the fear in many investors. On Monday, when the S&P 500 closed down 4% for the day and 11% from its May 2015 high, financial advisors found themselves fielding calls from jittery clients wondering whether to sell.

The NY Times describes one advisor’s day amid the tumult:

By 2 p.m. Monday, Gregory J. Blank, an independent financial adviser based in New York, had already fielded nearly 20 phone calls from anxious investors. He handles assets for about 200 clients, a mixture of younger adults and retirees.

“They see it in the news,” he said. “They get worried. They call.” Mr. Blank said that the older investors were more concerned, since it was harder for them to replenish whatever they had saved up for retirement. But the worst thing to do right now is to panic, he advises them.

In Financial Planning, advisor Kimberly Foss recommends reaching out to clients before they have a chance to panic, and urging them to stay the course.

When volatility strikes it’s important to reach out with information and reassurance rather than sit back and wait for worried clients to call you.

The Navatar View: The good news is that markets showed signs of rebounding on Tuesday, with the S&P 500 up 2.2% at midday. But this may not signal the end of volatility. When markets melt down, as they did over the past few trading days, advisors need to anticipate significantly higher call volume.

In times of crisis, it’s essential to know that your firm can handle those incoming calls and keep clients focused on their long-term plan. Even when markets are on the rise or holding steady, though, you can undertake outreach and education to ensure that clients won’t overreact when those market drops do happen.

This may be a good time to review the breadth of information you’re maintaining on your client base as well as your strategy for keeping them informed and engaged with their investment plan. A state-of-the-art system, such as Navatar One, which can automate this process, can help tremendously. When you can identify which clients may have more reason to worry when corrections happen – as well as those who have a tendency to worry even without reason – you can more effectively get ahead of the panic that market declines often induce.

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Smaller Private Equity Funds Well Positioned to Exploit Fundraising Boom

“The words fundraising and fast are not often found together in private equity. In the aftermath of the financial crisis, even the successful firms took years to raise capital. However, in the past 18 months, the most popular firms have raised funds so quickly that investors are struggling to keep up.”

Simon Meads, in his Financial News article, points out that major PE firms are experiencing hectic fundraising activity.  EQT and Blackstone are expected to hit the upper limit for their funds in just a few months – something that historically took a few years to accomplish. The time taken to raise funds is declining from an average of 18.1 months in 2013 to 15.8 months this year (the hottest are moving much faster).

“The phenomenon is the result of three factors. Distributions are flooding back from previous deals–meaning investors are racing to keep up with private equity allocation targets–while confidence about the long-term economic outlook is improving. But perhaps most critically, investors are more certain today about the managers they like and are concentrating their commitments with a select few. As a result, the popular funds are oversubscribed.”

Most observers agree that PE investors will continue committing larger sums of money to a smaller number of bigger, better known firms.

Does that mean that fund managers outside the top tier will be left behind?

The Navatar View:

Money is flooding into the asset class and investors are under pressure to do all the due diligence in a compressed timeframe. Despite their preference for bigger funds, investors may not have a choice if they do not stay ahead of the curve and act fast.

Which opens up a huge opportunity for funds outside the top tier. To tap this opportunity, however, the second tier funds must lead, not lag their peers, when it comes to in staying in front of investors. They need to be the best in class, in managing investor expectations and be on the right side of their LP’s regulatory framework very early into the fundraising cycle.

Smaller funds have an inherent advantage over larger funds. They are nimbler – they aren’t stuck with red tape or archaic tools. They have the flexibility to utilize state-of-the-art technology, such as Navatar Investor, to build the next generation fundraising machine.

We will have more statistics on their performance, in the next few months. Stay tuned.

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Will Financial Advisors Increase Allocation to Alternative Asset Funds?

Navatar - Financial Services CRM for SalesforceA Financial Advisor IQ article recently reported that FA client allocations to alternative investments have grown by close to 20% across wire houses over the past three years.  Seems like pretty strong growth, right?

Until you look at the data showing that alternatives still represent only around 5% of most FA client portfolios. Investment News warns that’s not enough to control portfolio risk, according to industry experts.  Among them:

“Ed Butowsky of Chapwood Capital Investment Management tells Investment News tepid allocations to alts do little to control risk. To make a difference, he says, you need 20% or more…’”

The article notes that alternatives (such as hedge funds that can offer portfolio protection against down markets) “will come screaming back in vogue” in the next market correction, but in the meantime advisers appear cautious about suggesting fee-laden products that have underperformed in the current bull market.

The Navatar View:

Investment News rightly points out that when markets ultimately correct, advisors may wish they had been braver in suggesting bigger allocations to alternatives.

But that’s easier said than done.

To effectively alter individual asset allocations across a large client base is a sophisticated operation.  Advisors who aim to lead not lag their competition need to be on top of their game when it comes to knowing each client’s needs, their risk appetite, their varied personal situations, etc.  And they need airtight compliance processes to move client portfolios into private capital markets.

In addition, they will need new and better ways to connect to — and evaluate — alternative products and investment opportunities.  Navatar has hundreds of alternative asset funds as customers and we know how difficult it can be to stay close to opportunities to invest in these (one of our soon-to-be-launched products will make this easier).

The bottom line: Winning in this environment requires ever-increasing sophistication.  Advisors need to expertly leverage tools and technologies that establish them as leaders as well as open up the right opportunities.   We get it.  As the #1 connected growth platform in the industry, we’re regularly adding functionality to help our clients drive their growth agenda.

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Allegiance Capital Gears Up For Strongest M&A Year

David Mahmood has grown Allegiance Capital into one the most active and dominant middle-market investment banks in the world.  Allegiance has closed on hundreds of transactions ranging up to $150 million in value, through their global network of deal professionals.  Their success can be attributed to Allegiance’s focus on maintaining an entrepreneurial mindset, but also to their embrace of state-of-the-art technology.  Allegiance is now poised for its best year ever complimented by the adoption of a firm-wide platform that has resulted in their ability to identify and close deals 20% faster, while doubling their documented pool of qualified buyers.

A serial entrepreneur, David created seven businesses in various industries, before starting Allegiance Capital.  Headquartered in Dallas, Allegiance has offices in Chicago, New York, Minneapolis and Monterey, Mexico. It also participates in Globalscope, a group of leading corporate finance and business advisors operating around the world, providing access to a larger pool of qualified potential buyers that many of its domestic competitors lack. Since its launch in 1997, Allegiance has closed hundreds of middle market transactions ranging in value from $10 million to $150 million in a variety of industries that include agriculture, business services, construction, retail, chemicals, energy services, healthcare, manufacturing, technology & telecommunications, and utilities.

Allegiance’s success stems in part from Mahmood’s experience and understanding of the entrepreneurial process. Many of the bankers and managers at Allegiance are former entrepreneurs, so they understand what it means to run a business. They are also very tech-savvy and understand how good technology and timely information makes the difference in a sale negotiation. Continue Reading →

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A Cloudburst of Financial Advisor CRM Options – What to Look For

CRM for RIAs, Wealth ManagementThe RIA business, being heavily dependent on client relationships, relies on efficient CRM systems.  Several legacy software vendors have traditionally offered CRM to financial advisors with mixed success. With the advisory market growing rapidly, newer cloud CRM vendors are bringing more options, in addition to forcing legacy vendors to upgrade their offerings – which is great news for the advisory business.

For instance, Navatar, a pure play cloud CRM provider, enters the space after their success in alternative assets and investment banking.  Navatar partners with Salesforce, the cloud poster company, to serve several financial services markets.

On the other hand, legacy providers, such as Junxure are also cloud bound. Junxure just launched their cloud-based offering.  Prior to this, Junxure had been selling client-server based CRM to advisors, which continues to be their main offering.

(There are some other options too. Custodians, sometimes provide CRM to advisors. So do horizontal providers such as Salesforce, Microsoft and SugarCRM, partnering with third-party consultants or resellers.)

The legacy and new CRM providers bring their own strengths.  The legacy providers, having worked with advisors for years, have an established customer base. However, coming from the client-server model, they are not known for innovation. They also maintain their client-server customers and, therefore, have to juggle both the legacy and new products – a bit of a distraction.

The pure-play cloud providers are very strong on innovation and servicing their customers. They bring the cloud DNA, having been deeply embedded in the subscription based business model. However, as newcomers, they still need to prove their value and earn the advisor community’s trust.

So, there are some trade-offs and it may not be easy to compare apples to apples.

Here’s my take on what to look for in the cloud-centric world if you are running an advisory business and evaluating CRM options. There are three important things to keep in mind, at a minimum:

I.     Look for a product that can cope with your growth. This one may seem obvious, but most people look at product features/functions before making a decision, anyway.  Depending on your size, focus (institutional/retail, types of products), as well as integration required into different custodial platforms, financial planning, or portfolio accounting systems, you will be able to shortlist two or three products that may have the potential to deliver. The important thing to assess would be how the product can accommodate your changing needs over time.  Is it flexible enough to support your business if you start, say, an alternative asset fund?

II.   Look for a product that won’t get frozen in time.  In the cloud world, the pace of innovation is fast, which means that the vendor must constantly improve the product. This is achieved through a technological concept called multitenancy (don’t worry, I won’t bore you with the geeky stuff). Multitenancy helps eliminate repetitive tasks and leaves the vendor with more time and resources to focus on product innovation (just the way the manufacturing assembly line brought drastic efficiency, so carmakers could spend more time improving their cars). Not every product is multitenant.  If you buy a product that isn’t, you may get frozen in time, while your competitors surge ahead with state-of-the-art products.

III.  Look for a vendor who is invested in your success.  CRM providers have traditionally been happy to sell you their product, before sending you to a consultant for fitting it to your needs. This model is changing in the cloud – the CRM vendor is expected to make the product work for you.  Unless the vendor is on the hook for ensuring your success, you will be spending money on consultants for years. The vendor must have a dedicated team devoted to your success and a solid track record to prove their credentials.

If you pick the right product, it will help you grow assets as well as make you more efficient. If you pick the right vendor, they will focus on their product as well as your success.

Good luck.

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