Kevin Price, Host of the Price of Business on Business Talk 1110 AM KTEK (on Bloomberg’s home in Houston) recently interviewed David Mahmood. Here’s that interview
About the interviewee.
David Mahmood – Chairman and Founder of Allegiance Capital. David is 75 years old. He has started, operated and sold 7 successful businesses. He started Allegiance Capital 15 years ago at the age of 60.
He describes Allegiance Capital as a Marketing company that happens to be an investment bank. “We have to be excellent in Marketing to reach our prospective clients and then to effectively market their companies to potential investors. The value of a company is not based solely upon numbers. It is based upon how many investors are interested in purchasing or investing in the company. The more attractively we can present the company and the more potential buyers we can interest, the more they are willing to pay for the company. We conduct a silent auction when we sell a company. That is what maximizes the value of any sale and it is all built upon solid Marketing.
David is still actively involved in the business and is in the office every day and most Saturdays. He tracks every deal from the original client meetings to the closing
Tell me about your firm (number of employees, location, type of companies you work with, etc.).
Allegiance Capital is a Middle Market investment bank. We primarily sell or find investors for companies with annual profits of $5 million or more per year. Our headquarters is in Dallas and we have offices in New York City, Chicago and Minneapolis. Allegiance employs approximately 50 employees. We work with all types of companies ranging from healthcare to oil field services. This year we have already closed four major transactions with a gross value in excess of $220 million. Allegiance Capital spends a great deal of time educating business owners about the M&A process and what they can expect during a sale or working with investors.
Tell us your story about reaching C-Level executives to do business?
Allegiance Capital works with privately held and closely held companies who make $5 Million or more in annual profit. Therefore, we have to reach the CEO or owner of the company. They are the only ones who can make a decision about selling the company or finding new investors.
We use five different databases to identify middle market business owners who meet our criteria. Once we have identified the businesses and the owners, we contact them via direct mail and telemarketing campaigns to provide them information about their industry and the opportunity they have to take their business to the next level through a sale or new investors. A great deal of our marketing efforts to business owners is educational. We make them aware of industry trends, recent sales in their industry and how it impacts the value of their company. These owners are making one of the most important decisions of their lives and most want and need information to make that decision. We also attend industry trade shows, conduct webinars, use videos, speak on panels, and conduct an ongoing PR & Marketing program to reach out to owners. We are one of very few investment banks with its own Social Media Marketing department.
Do you know of other examples of businesses being creative in this endeavor?
Investment banking is not the most creative industry out there. Allegiance tries to stay on the leading edge of marketing and technology to effectively communicate with prospective clients and buyers.
Some investment banks are getting more creative, because they realize they have to if they want to reach the client and effectively market the companies they want to sell.
Tell us why it is important to for you to pitch to the CEO.
Allegiance Capital works with privately held and closely held companies who make $5 Million or more in annual profit. Therefore, we have to reach the CEO or owner of the company. They are the only ones who can make a decision about selling the company or finding new investors.
We use five different databases to identify middle market business owners who meet our criteria. Once we have identified the businesses and the owners, we contact them via direct mail and telemarketing campaigns to provide them information about their industry and the opportunity they have to take their business to the next level through a sale or new investors. A great deal of our marketing efforts to business owners is educational. We make them aware of industry trends, recent sales in their industry and how it impacts the value of their company. These owners are making one of the most important decisions of their lives and most want and need information to make that decision. We also attend industry trade shows, conduct webinars, use videos, speak on panels, and conduct an ongoing PR & Marketing program to reach out to owners. We are one of very few investment banks with its own Social Media Marketing department.
What are some unique things you have done to get the attention of CEOs?
We recently rolled out a complete social media marketing campaign and totally revamped our website to make it easier to navigate and to provide business owners the information they want and need.
Unlike most investment banks, we have our own Marketing, PR, Research, Legal and Admin support departments. This sets us apart, because it enables our bankers to focus totally on the client while the rest of the team continues to market for new clients, promote existing clients or provide other support.
We believe in educating business owners first. Then we help them sell their business or find new investors. We want to ensure they understand the M&A process well and exactly what we are going to do to help them reach both their personal and financial goals.
Our educational/marketing efforts are done through our PR and Marketing departments. We use social media every day to broadcast information about M&A trends, industry announcements, company valuations, etc.
We also do some advertising in Business Journals and trade publications, but most of our clients come from a direct outreach by our Business Development team that is dedicated to identifying and contacting business owners every day.
Tell us about the type of companies with which you like to do business.
We work with all types of companies. Our ideal target is a company that is making $5 Million or more in profit annually. We really don’t care what they do, as long as they are successful and well managed. There are plenty of buyers who want to buy good companies. We are just looking for a few good companies.
What suggestions do you have for others trying to reach CEOs.
Reaching middle market owners is hard work. It’s not easy! First, you have to invest in the right databases that can provide you accurate information. Then you can begin to build your marketing and business development activity around that information.
You have to be creative. You have to be persistent and you have to follow up, follow up , follow up.
Sometimes it may take us 2 or 3 years to reach a CEO before they are ready to make a decision. It is all about constantly being in the market, so you are there when that CEO makes the decision to move forward in the process.
It doesn’t make any difference if you are selling trucks or M&A services. It all boils down to identify the target and developing a process that will reach that target at a time when they are ready to buy. For some businesses, that may be done through direct mail. Others may use only social media or online advertising. Others use print. We use a combination of all of these, because you never know where a business owner will find you.
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