The Woes of Investment Banking: Corporate Defences Against Cold Callers
20 March, 2011
You are either on the Rolodex, in which case expect the red carpet, or you are not, in which case you had better come prepared to do battle. This will be deeply familiar to anyone who has tried to cold call a corporate.
The corporate defences are there to discourage the casual and non-serious caller, but they can equally discourage the valuable and interesting ones at the same time. How many deals were never communicated to a possible corporate buyer for failure to get through to the decision maker?
Over many years of being at the sharp end, I have identified three corporate cultures, as follows:
The Fortress System, characterized by any of the following:
- “we have a no-names policy”
- “send an email to info@…”
- “he/she will not be interested”
- “is he/she expecting your call?”
The Velvet Rope Door Policy, characterized by any of the following:
- “send me the material and I will find the right person”
- “he/she is busy but will see your email”
- “I suggest you leave a voice mail”
- “only the PA can give the email address”
The Bouncy Castle, characterised by any of the following:
- “ let me see if he/she is available”
- “you should contact this person, let me give you the direct dial and email”
- “ I will get them to call you”
For each category it is important to distinguish between quoted companies, private companies and the ever-growing list of those owned by private equity houses. This approach leads to a matrix view of corporates. There is an interplay between the degree of public disclosure on one axis and the corporate culture along the Fortress to Bouncy Castle spectrum, on the other. Large private equity groups are increasingly following more generous disclosure requirements and reporting as a response to concerns over their social good.
Companies have two lines of defence. The outer perimeter and inner sanctum. Throughout time the outer perimeter fortifications have been overtaken by technological improvements, usually in the range and accuracy of cannon. Today it is the internet. More and more effort is accordingly placed on the inner sanctum, or corporate HQ, which can be more controlled.
The outer perimeter refers to the amount and quality of information the company itself chooses to make available over its website and publications. Even listed companies can obscure this information, for instance, by only revealing directors names in the full download of the report and accounts. But they usually forget to control elements such as contact numbers on press releases. In any event, perimeter security is becoming largely ineffective in the face of search engines, Linkedin, mapping systems which identify telephone numbers from addresses, press stories and a myriad of other materials on the internet.
The inner sanctum starts with the switchboard number. All operators are trained and are aware of company policy. A certain UK engineering conglomerate PLC deserves a mention because it is the most impenetrable. The Verdun of corporates. Catch 22 situations develop whereby you must know the name of the person you wish to reach but cannot find it. If a UK advisor cannot penetrate, what hope for someone in an emerging market trying to establish contact for a commercial purpose. I suspect that even if you could find the name, there would be several more layers of impossible questions. The image of bodies piling up comes to mind.
Having persuaded the switchboard to put through the call, the next level of defence is the personal or executive assistant. There are four types often mimicking the corporate culture, but sometimes they are pure rogue reflecting a view of the job:
- The “Stranger Danger”. You are not on the Rolodex so no way will you pass.
- The “Power Tripper”. The answer is “no” what is the question.
- The “Decision Maker”. You need to persuade me before I put you through.
- The “Confident Judge”. You sound nice and sensible, let me put you through.
It is quite sobering to ponder the billions in wasted economic activity caused by the world of PAs blocking or taking strategic decisions on behalf of their companies and immediate bosses.
There are a whole host of counter-measures which can be deployed, but the purpose of this article is to highlight the issues. We live in an Information Age. We are all bombarded with too many emails, too many reports and the clamour of attention from every quarter. Some sort of filter has to be applied. The busy professional or executive needs to make a judgement about admitting new material or offers. However, a blanket refusal is not the way forward. Yes, it removes an issue but it also denies the whole spectrum of opportunity.
If we had first class email or contact only from trusted sources, life would be so much easier. In most cases that is impossible. In one small way, MergerID makes a difference by providing that trusted environment. You might not want to take a call or read an email from a stranger, but if that “stranger” comes via MergerID you know they are serious, professional, vetted and subject to rigorous terms and conditions. In other words you can confidently let them in.
MergerID spends a huge amount of time getting past the corporate barriers to the decision makers, assisting them to post their criteria on the platform so they are immediately available to other members without all the barrier issues. Moreover, material on MergerID will receive that most precious of commodities, quality corporate attention.
