Text version of interview
Let’s kick off with brief introductions on yourselves, shall we?
Jill: My name is Jill Harrison and I am with the team at Silverline, a New York-based technology consulting company and we focus primarily on the Salesforce ecosystem. Although my initial role at Salesforce was helping financial services firms create technology roadmaps and see their technology products through to execution, my role has shifted over the years into really looking at what is happening on the leading edge of innovation and how our firm is really trying to create a competitive edge through technology and productivity.
Steve: My name is Steve Siler and I am a CTO at Stonebriar. I met Jill five years ago and we started working together on investment banking and M&A projects. We started having a thoughtful conversation around what people are using in the marketplace and what can we do to build something new and compelling. I started out in insurance, moved to commercial finance, then investment banking, and finally transitioned back to commercial finance, with a little bit of flavor of PE. We are focused primarily on leveraging the limited headcount that we have and augmenting that with technological tools that allow us to get a lot more done with a smaller group.
The first question I have for you is what are some key tech trends you’ve seen, related to M&A?
Jill: The first thing we are seeing relative to trends is really the obsession with data, which is what we see with investment banks and private equity firms across the country on both sides of the deal fence. Some of these firms are using up to forty and fifty different sources of data to drive their operations.
This can be anything, from new business development sources, where they are looking at potential deals coming down the pipeline, investment opportunities that they can participate in, or the streams of data that exist already within our firm for managing their operations. These firms are really thinking about how to marry all their data sources together to create one unified platform that can become the basis for a future-scaled data intelligence center.
Steve: A good example is a league table of the publicly available market that you are tracking all the time when you start using your own internal tracking of how many deals that you’ve gone through and then integrating them into your market for your pitches. This is so that you can make this marriage of data together to actually progress your progress and feed into that prospect pipeline.
Jill: These firms are really actively investing and transacting new data startups, so they are often at the forefront of what’s possible with AI and natural language processing. They are buying and selling these kinds of firms to big corporate enterprises, but they are often further along in their deal processes then they are internally with their operations relative to data.
The mindshare is really focused on how do we become more agile and how do we understand the ROI of the different sources of data that we are investing as a firm, and showing that value back to our bankers so they can understand when and where the most likely and the most lucrative deals are going to pop.
Steve: That’s where Jill and I disagree. Yes, data becomes a very cornerstone component of the overall strategy, but I feel like workflow and experience and reducing the amount of friction that somebody needs to do relating to the same amount of work. This is one of the primary things that’s happening in tech right now, too. It is like the user experience of an analyst versus a director. You are at different levels and your user experience and the serving of that data is going to be different.
The workflow is something that we deal with day-to-day. Can we try to break this down a little bit in terms of the landscape in the industry?
Jill: From a people architecture standpoint, a lot of the bulge bracket banks face so much more bureaucratic friction in their innovation processes because they have a much bigger machine. They are less nimble and can’t move as rapidly as the smaller firms that have much more visibility for individual contributors in the organization to drive the ball forward.
It’s important to help these organizations, private equity firms, hedge funds, investment banks to change their mindset to have a true partnership between the business and technology, understanding not just what the functional requirements are, but what’s the feedback loop between the two.
How are they actually developing this competitive edge to fuel growth?
Jill: Most investment banks are starting to question the nature of collaboration now that things like social media tools are widely accepted. In the past, investment bankers were really protective of their contacts, relationships, and all of the things that make them good entrepreneurs. Now we have modern technology tools that allow us to understand the nature of and map out relationships.
Steve: The security coming along with it gives them a little bit of comfort to share. They try to share just enough so they can get additional gains by just doing that.
Jill: Competitive edge is a cultural shift first, and bankers have to start to understand that. The newer generations get this. You also have management teams of these banks more focused than ever on true reporting. If you can draw a line between relationships that are entered, the way that you can mine your own network, and then the outcomes that your product group or your team gains - that speaks volume to management and creates a feedback loop of how to manage a rapidly growing investment bank.
Steve: Investment banks are now also taking a look at their cohort level. The cultural phenomenon is really driving all of it.
Jill: Bankers in the past used to have assistants or analysts compile tear sheets for them, so every time they would go and see a strategic client they would have the approach of: show me what you have done for me and do me right. With our accelerators on Salesforce, we have created the right modeling and toolset to be able to pull up the tear sheet based on data. All of that helps with the agility question and then shows the value back to the banker.
Steve: Based on that same data, you could look at the existing process. As you make way through that process, you can hone in on people’s behavior over time. You get to interpret what people’s appetite is for certain types of companies, so you can maximize the value of the company that you are selling. This helps you maximize that multiple and that feed that data into a pitch the next time.
Jill: What Steve is talking about is what I would consider to be another trend that we see a lot now. Many are still using spreadsheets, but the problem is that spreadsheets are a flat representation of something. It is not truly a database and it is not married to a lot of other data that exists throughout the firm. In order to get to that holy grail of predictability, which is where AI comes into play, you have to look at those processes and workflows in tandem with a mountain of data that sits within the confines of the firm.
When will that perception hit the client in his decision on where to land their engagement with?
Steve: I think the amount of attention that an internal person can put onto their clients becomes a little bit more of a touchpoint, and they start to be able to have additional time to focus on additional bells and whistles. They have additional time to create something, at least in the pitch environment, that is data-centric. Once you have all the metrics, that is the cutting edge, because then you can supply this information and we can lean on all of our information.
Jill: I think at a fundamental level, a lot of financial services firms, in general, are not as fluent with what we in the tech industry consider, such as user experience design, customer experience, employee experience, and the actual design of day-to-day toolsets. Borrowing these kinds of concepts from tech shops can be very advantageous for bankers to use as a lens to reframe the experience that they are offering to their customers.
How do you relay that to the prospective client that’s evaluating our client to work with them?
Jill: Being able to represent the potential buyer’s list and the rationale for why you may show their company to that set of buyers is often a very compelling point to engage. Showing that financial rationale, based on hard data your firm is capturing, shows that you really are tracking all of the pieces internally that would give a potential client the confidence to engage.
Steve: At the same time, you are showing your point of view, which is based on data, but also your experience and a little bit of gut checking. If you also include people that you wouldn’t recommend reaching out to, that becomes important too, because you are offering both sides of the coin. Oftentimes, you can share the entire boiler of what a pitch check would be, with a click of a button, with modifications and customizations just for that client. The contextual data around that client allows you to be able to customize that on the fly very quickly.
Jill: One question for you, Kison. A lot of times, customers don’t see a lot of that work, so they can’t really see what their bankers are actually doing to help them with the transaction until they get to the diligence portion. Then they get actively engaged and sometimes it is a huge workload and a huge burden on the management team. How technology helps their experience and helps them with peace of mind?
Kison: I would say the big thing, purely on the data side and managing a process, particularly diligence, especially in a competitive environment, is making sure there’s no blind spots and bottlenecks. Things get intense, especially if you handling the banking situation, multiple-bidder situation auctions and there is a lot to keep track of, so just to have this extra assurance that all the boxes are checked.
Then you dive deeper in by actually having data on the diligence process itself. It is a living project management tool where you can track every activity. You start noticing things and noticing buyers spending time in certain areas, which you can later bring up and prepare for in advance. People are just using Excel, but they are not capturing, retaining, or analyzing anything. That’s something that can be leveraged.
Steve: There is also something more simple like the onboarding process, where you’ve won the mandate and you want to get your working groups together. Being able to get all the information and have it in a repository so you can quickly access it and make sure that the people that are working together know who to contact to work together.
Jill: I was thinking about the other side of the fence and I think the customer experience there is often very driven by regulatory change. There was a lot of resonance in the market around what’s going to be the right experience to address regulatory changes and considerations. A lot of the more forward-thinking firms are really trying to look at what are the fundamental operations challenges that they have been, and looking for ways to nail those to the wall so they never have to think about them again.
The big thing I see in the industry is just no practice of project management techniques.
Steve: I agree unless they have an internal training program that focuses specifically on that. Some people are doing it, some are not. Those that are not, you can tell that they have been struggling and it’s the whole building the culture up from the top-down and the bottom-up at the same time. If they are not having those training programs for their people, they pay for it from the top.
Another question that has sparked interest is, can we hang on to these good people that make a difference for our company? Can they lean on the best practices that we've set up, while still being creative? A lot of the mentality has been changing around that, too.
Let’s talk a little more about roadmap technology for the M&A industry.
Jill: A lot of these big banks, private equity firms, hedge funds have a constellation of enterprise architectural systems that are aging fast. The roadmap for a lot of bigger banks, the more innovative and leading-edge banks that I’ve been dealing with, are trying to answer the question of how can they be more nimble in ripping and replacing systems. They are aware of the new platforms, but technologically speaking, they are unprepared.
When you have dozens of data systems that are feeding the business development pipeline, operational pipeline and operational systems that are feeding the workforce and all of the staff internally, you need to try and figure out how you can reduce or remove dependence on the entire infrastructure of your firm to one system.
One of the craziest things I’ve seen in M&A was that I have been asked by the head of a fairly large investment bank if I could help him build his own Terminator-style device, where he could identify all the different touchpoints with the person he was talking to through facial recognition. This is the sort of danger of educating bank executives on what their true user experience can be like.
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