Marketing In a Capital Surplus Market

Truth in the matter is that people working in investment banking rarely have a need to focus on marketing and advertising for themselves. Other than image and branding ads more oriented to ego-burnishing, they have had little need to focus on marketing & advertising at all... for themselves.

This is a field in which, once you actually do have money to invest, the capital consumers find you. There is no need for any differentiation as in a capital scarcity market the consumer did not need to know the capital investors' bona fides. All that mattered was the facticity of having capital to invest.

There are two key aspects to marketing for Investment Bankers Corporate Finance Departments:

One - Industry Relationships - once you are known to have money to invest, the market finds you. Most closed deals are referenced through the relationships already established with finders and early-on deal-makers. So the actual exposure to opportunities comes through an "extended family" of people and firms already known to the corporate finance department. Deals came through via already-known-deal-finders.

Two - Middle-Small-Cap Sized Companies have most likely never used any corporate financial services. They will not show up on the "Industry Relationships" radar at all. That market will not show up in standard prior relationship networks.


There are also key differences which will hinder standard corporate finance evaluations. They are:

One - Middle-Small-Cap Sized Companies rarely have any GAAP accounting records at all. Their primary financial reporting is for taxes and their tax returns are NOT GAAP accounting savvy at all.

Two - Their accounting firms do not prepare GAAP accounting reports and are often unwilling to do 3 past years and 5 future years forecasting using GAAP accounting. What must be created from the tax accounting is called "re-cast" projections. Creating these re-casted projections is what the investment banker does based on extensive interviews with company management and their accounting firm

Three - Their tax records often include a wide range of expenses, family expenses, etc. to reduce taxes and not to increase EBT at all... quite to the contrary. This disparity is not uncommon as most Fortune 5,000 companies also have widely divergent reports for GAAP and Tax Accounting. But they do have GAAP reports and Corporate Finance Departments generally deal only with GAPP Accounting. Here the accounting is re-cast, based on facts, but aimed toward removing as many tax expenses as possible and correct. That becomes the basis of the evaluation.

Four - In marketing operations to find and deal with Middle-Small-Cap Sized Companies this disparity has to be dealt with as almost the entire Middle-Small-Cap Sized Companies market will not fit normal financial accounting practices at all!