Zumera’s Post

Transcript

Yeah, it's a a quick start, Marco. I want to thank you for the invitation again and for the amazing work that you and your team have done here once again and not only organizing this conference, but also piling up 10,000 of comps again with us together to create the second version of the North Mara Bible. I think many of you have seen it. It's yeah, currently by far the most in that piece there is out there to value companies, especially for fundraising. Activities we have I think more than 150 different verticals that we've analyzed and next to organizing the conference your team had again hundreds of hours of time to do the next version of the of the Bible with us So thank you thank you very much on that end yeah today I'm here in a in a kind of a hybrid function of course we have many clients here as well many investors that. Regularly talk to for our own projects, but today I want to talk a little bit more about Sumera itself and the investment banking world or the small cap investment banking world and how AI and tech can be used or is being used by us to change the M&A advisory landscape. And by introducing that topic, I would like to tell you a little bit about the market because I don't know. How familiar you are with it? Uhm, uhm, I think if you look at the large cap markets or where the Goldman Sachs, JP Morgan's, etc. Play very well, you basically have two things that you want to achieve when you do M&A. And it doesn't matter if you do a fundraise or sell side process, exit minority, majority, it's completely irrelevant. There are always two big parts that you need to that you need to yet that you need to succeed and one is the network. So when you. Mandate an investment banker, you're expecting him or her to have personal contact to the, to the investors, to the potential buyers, et cetera. And on the other hand, we call it market intelligence. The wording we can, we can discuss, but what it actually means is you want the person to really understand your market, to really understand your value chain, what's happening right and left from you. What, what, what do your, what do the customers really want? What do the suppliers really want? So you really want deep market insights in the large cap market. This is usually delivered by the large strategy consultants, McKinsey, BCG, Bain going inside out on a daily basis and defining and discussing strategy and also defining business plans, financial plans and delivering that to the investment banks who will then provide in-depth feedback from the investors they are covering. Usually have coverage in the investment bank. So when you sell a company in whatever sector you can. Think of anyone they, they are they, they are all structurally similar. You will have two hands, maybe four hands of potential buyers and investors. You will all meet them on a you will have 10 investment banks that would all meet them on a on a monthly basis CFO coverage, see or coverage. So you have a very good understanding and you have very good personal relationships to the actual decision makers in the small cap market. And I'm talking here about market sizes everything below for sure below 100 million. So this is the. The real target, but in fact, if you look at mid cap transactions below 250, it still looks very similar. Very often you basically have on the investors and buyers side potential of 10 thousands of investors and buyers globally their family offices doing deals. And I've recently done this with with a potential investor for for our fundraise to to look at merger market and just check like 20 random deals in the deal size 10 to 100 million and then try to. Try to understand the rationale why they did this investment. And I think in 70% of the cases we had absolutely no clue why this investment had been made based on public information. It's simply impossible to to determine to determine that. Why is that because the market is usually very niche. It's not a huge global chemicals market, but it's rather just 11111 single piece of it or in vice versa in the technology you will have a very niche and market or so which no one publishes that that. They want to invest in that exactly exact particular segment. And on the market intelligence side, that's even worse. There are simply no strategy consultants in the small cap market. I have myself advised around 50 deals in our history. We've done hundreds of deals. And yeah, there's, I think I have never had a client who ever mandated a strategy consultant. So that's a huge problem, not only on the company side, but also on the market side. There are no data. You don't really know who your competition are. Even if I talk to my clients, usually in the course of a project, there are 10s of 10s or 20s of of competitors suddenly popping up, and they have never seen them before because the market is so fragmented. Deal tickets or project tickets are usually small. And that's a big problem. And the only way to solve this problem is to solve the data. Yeah, because a single person, and this is what you usually get when you hire an investment banker, you get very smart. People usually from the best universities and they usually do a great job, but it's simply physically impossible to cover 20,000 investors by yourself or to have an overview of the 500 players that act in a niche market where you might be able to do to do M&A. So the two most important things that we are trying to solve and when I say this, I'm now moving a little bit more into this cell side majority cell deal, which is our usual. Products or the actual exit or the edge succession or something like that because yeah, from our perspective, it's the deal with the highest likelihood and the highest chance to actually succeed. We want the highest purchase price and the biggest transaction certainty. And we we manage to do that by having this network and market intelligence. Solved. How do we solve this? It's quite a complex tool. We've built a tech infrastructure and we're using a lot of AI to do that. Simply speaking, investment bankers, they talk to decision makers on a daily basis, investors, buyers, entrepreneurs. I think we have by now around 200 of these structured calls, at least half an hour where you have nodes, strategy, insides, inside about other MA markets, insights about transactions. These are all proprietary data. We're also not allowed to publish them by NDA, but of course we can use them for, for ourself. And if you have the tech infrastructure to, to, to set up these these nodes and you have an AI that sometimes makes sense out of notes that you otherwise wouldn't even find back in your back in your history. It simply helps you, helps you to do a better service at the end because you're finally able, the more advisors you have, you have economies of scale and you're finally able to. Actually leverage the the amount of of advisors that you have. So once we have 102 hundred advisors, it just gets better and better, better and better. And it means that you are actually able to cover 10 thousands of investors to have knowledge about 30 thousands of the entrepreneurs that are out there in the European small cap market. And not only with that, but we are traditionally we are very sales intense firm. I would say this is also how we interpret our job as an investment banker. So we're not only sitting behind our desk and doing a nice analytical strategic stuff which is smart people do, but we're actually sit down and take on the phone and call for you out in the market, talk to your competitors, talk to your clients, talk to your suppliers, but mainly talk to your investors, to your buyers, etcetera. And discuss market hypothesis, discuss strategy and also, of course, define the right equity story that you need to, to maximize your transaction certainty and to maximize your firm value. And we're doing that multi channel. So the typical generic e-mail that you usually get in the market, we don't do that. So we phone, we do LinkedIn, we do post, we do emailing, but always very individualized. And this is where tech, of course. Epstein also AI helps you to pile all these private proprietary information that we have and public information to then, yeah, do the best deal that you can. The market is huge. Many people don't know. And just to very briefly, it's a $9 billion mark, ���9 billion market, 2/3 of them are untapped. So there are no M&A advisors that are actually acting in this market, which is an untapped market. So at some point, the larger you get, the more you can activate. Them we're activating many of them. And it's not that we don't want to go into uncompetitive processes. In fact, we always advise clients to talk to at least one other MNA advisor because otherwise there is no comparison possible to our pricing. And our pricing I think is reasonably high because we provide a better service and we want you to compare it to someone else so that we can actually price as we want to price. Our larger challenge, our largest challenge is the mindset of the people. So whenever we take on new people who have been in the industry for 10 years. Plus, it's always hard to, to change their mind to, to actually get them to be open minded, to use new technology, to use AI and, and this in, in many ways. And with that, I thank you very much for listening and I'm very happy to, to meet some of you later for in, in that discussion. Thank you very much.