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To Go Global, Go IMAP

Mark Esbeck

For M&A dealmakers looking to expand their global operations, IMAP might be the organization for your firm.  Be aware though, the organization is by invitation only, as IMAP focuses on highly personal-professional relationships.  To that end, we asked Mark Esbeck, President of IMAP, about his own professional history, the history of IMAP, IMAP's current focus, his take on the middle market going forward and the process for becoming a member.

M.A.: What is your background and how did you become President of IMAP?

M.E.:  I was a leader of a corporate advisory firm in Des Moines, Iowa for about 20 years. Our firm became affiliated with IMAP in the early 1990's. At that time IMAP operated as an association of independent M&A advisory firms. So, most of the collaborative business activities of the organization were managed by volunteers, leaders that supported that effort.  Each one of those volunteers were elected President of the organization and then was involved in that leadership capacity with the efforts to reorganize the IMAP business into more of a global business brand, which happened in about 2005.  As that process developed and the member firms supported that movement we began to staff IMAP with professionals. 

M.A.: What was the impetus to create IMAP?

M.E.: We trace IMAP back to 1973,  but really it goes back almost a dozen years earlier than that when a company by the name of Chapman and Company started a nationwide franchise of business brokerage offices and they focused on some of the larger mainstream deals at that point in time. And that business operated for about 10 years with varying degrees of success.  Some offices worked better than others but on a collective basis it didn't generate enough economics for the founder to sustain the business so he closed it down.  Then IMAP kind of sprung from that.  That became the genesis for IMAP as some of the more successful offices decided to run their own shops and collaborate together as an operation.  And then from that they attracted other independent operators around the United States. Of course, this was way before the Internet when it was important to have contacts in different markets within the United States in order to match up buyers and sellers.  And then that expanded globally.  The Internet came in; there have been a lot of changes that have happened at the top requests.  Private equity companies started to become more prevalent.  And globalization began happening in a big way, fifteen or twenty years ago.  The IMAP organization has always evolved to meet the changing middle market M&A landscape. 

M.A.:  You mentioned the Internet and Private Equity, what have been some other milestones you have seen in the middle market M&A deal space over the course of your career?

 M.E.:  If you take IMAP back to its beginning, it was really close to when the whole merger and acquisition advisory market started.  It started with Lazard back in the early sixties and gave professional advisory support to companies to get M&A deals done.  But heretofore, prior to that a lot of [deals] were done in the clubs and other places where larger businesses, owners of businesses and operators congregated.  Lazard, started the M&A advisory business.  IMAP started a process of putting together a larger footprint in the U.S., for matching buyers and sellers for more mainstream businesses.  And all of that was before personal computers and spreadsheet software and things of that nature.  So, I think, the evolutionary aspects that have happened in this industry have been spreadsheet software, personal computers, Private Equity activity, [the] Internet, globalization--all of these have continued to span a more professional M&A industry. Media companies, such as [the M&A Advisor] that are focused on the industry have been an outgrowth of activity that has happened over the last forty-fifty years.

M.A.:  Globalization is one of IMAP's strong suits.  How did IMAP become a global organization and what direction do you see global M&A taking?  And in particular what role does IMAP play in fostering international transactions?

M.E.:  Well I think, the U.S. has always played a major role in mergers and acquisitions activities.  Often times being buyers of companies outside the U.S. to expand the U.S. centric business model.  With the advent of the European Union, there became another impetus to generate M&A cross-border activity and that was building a European platform for many European businesses that would spread across the E.U.  We are seeing that kind of activity happening in Latin America.  Latin American companies are becoming more competent about expanding into other South American countries that have stable governments and stable business environments.  And of course India and China, as well and in addition, are becoming more and more global players in M&A. And we anticipate seeing a lot more activity in-bound and out-bound from those countries.

M.A.:  In a recent league table with your competitors [KPMG, PWC, Rothschild, Deloitte, E&Y and UBS] IMAP ranked 5thin Chinese transactions.  Is that because IMAP has had a strong presence in China or is that because IMAP has more recently become aggressive in that geographic market?

M.E.:  With China and with a lot of other IMAP countries, it is really important to understand the market and how the market is evolving and transforming, in order to be successful with M&A.  And so our people in our China office are very experienced both in a business education background and they have been involved in M&A activity as the opportunities have continued to advance and grow in China.  In the beginning, [we] had a small group of people dedicated to M&A and now about half of their business operations are dedicated to M&A [in China].  So, I think, you know, being in the middle market and being independent operators is one of the things that allows us to do is to change and to work with the changing environment. 

M.A.:  We noticed you have a global survey that IMAP publishes.

M.E.:  Yes.  We are always publishing the year after.  So, [our next survey] would be a recap of 2009 and so the report will come out in 2010 and it will be an interesting piece of work this year.  I am not sure how much guidance [readers] will gain from it in terms of 2010 activity. We hope 2009 will be a very abnormal year and an outlier year.  I think, it will be interesting from the standpoint of capturing just what went on during these last twelve months.  As the year [2009] has progressed, it started out pretty slow the first two quarters, it picked up more pace in the third quarter and in this quarter now, almost all of our offices are very, very busy with projects.  So, that's all a good sign.  We are targeting towards the end of February to have that report out.

M.A.:  What makes IMAP unique?  What is IMAP's sweet-spot and what makes IMAP the choice of M&A organizations out there?

M.E.:   We have a strong emphasis on personal relationships and collaboration through intimate knowledge of our partners.  Our global partners work with each other. I think, we all share a passion for exceptional client service.  Global reach is fundamental to any kind of global organization.  If you don't have it, it is hard to be considered viable as a global M&A organization.  And we are creative in how we solve our problems.  Our intimate knowledge of each other and our commitment to provide support to IMAP colleagues on every transaction, I think helps to differentiate us.  We gain [this] because we spend time developing relationships with each other.  We don't just know each other as the guy in the Missouri office or the Sao Paulo office.  We know them as people.  We know how they approach serving clients.  So when we wrap them into a project we put them together to serve the client. 

M.A.:  Are there specific sector strengths that IMAP can provide its members or potential members?

M.E.:   We have about 400 M&A Advisors around the world.  And, I am always amazed as I get to know more and more about the talents, capabilities and experiences of our people.  One of the things we are working to do is to be able to communicate those capabilities better.  The macro industries and the mid-industries categories that we display on our website.  Not only do these help visitors that come to our website find Advisors that might help them on their projects but it also helps IMAP colleagues find people to collaborate with on their project.  About a third of our projects involve buyers or sellers from different countries.  So, there is always a need to be able to figure out a way to collaborate more intimately and closely with each other.  So, to get back to your about question, do we focus on industries in the mid-market industries area, I think what we have in IMAP is we probably have a lot of niche areas that we can cover pretty well on a global basis.  Where we have two or three or four Advisors in three or four continents that have vast experience in a very similar area.  We have over 3,000 related transactions in our database.  And we are in the process now of organizing that information so that we can assemble the mid-macro teams in a better way; and help connect people organizationally, so that they can see that they have relationship experiences that will allow them to target additional -niche opportunities from an industry perspective, as they are out there with their business development activities.  

 M.A.:  Please tell us about your October symposium and your upcoming April one as well?

 M.E.:   As I indicated earlier, we are big believers in personal interaction and relationship building and so as a consequence we have had physical conferences for IMAP twice a year, for the last thirty years.  And we wanted to take and expose our people and our capabilities to the external market so we developed the symposium concept to do that.  What are goal and effort is, is to share and collaborate with people in the M&A industry, [such as] corporate development officers, Private Equity, and executives in the same way that we collaborate internally. And so we wanted to demonstrate the IMAP personality to the industry in that manner.  We thought the symposium a good way to do that.  Where we bring leaders to the global M&A together, to focus on what is happening in the industry and then we can spend time really networking and developing the relationships one-on-one across the table from each other in what we call bi-lateral discussions.  We completed [a symposium] in Istanbul and it was really very successful. It was focused on connecting people from the Middle East and Southeast Europe.  We surveyed the people ten days afterwards and everyone really enjoyed the event.  So, we are looking forward to developing something similar in Miami, Florida on the 9thof April. We are also scheduled to [host] a symposium in Paris in October of 2010. 

M.A.:   What do you think will be the characteristics of a good transaction for the middle market going forward?

M.E.:   I think that one of the hallmarks that will define the industry in the coming years will be capital providers will have more respect for capital than maybe they had three to five years ago.  The availability of easy money, I don't think, will be that prevalent in the market place in the upcoming years.   I think, another activity that is probably going to underscore the market in the coming period is something that has always been there in the M&A market and that is creativity and the ability to figure out solutions for situations that at first hand don't look that easy to solve.  And so I think that experienced people, better innovative [is key] and what we find [is that] collaboration is a huge asset to innovation because you are able to bounce ideas and thoughts off of other people facing similar circumstances.  Just through dialog alone sometimes solutions are manufactured and you can't even remember how they happened but they happened because you interacted with the right people on the right topics.  And I think that is going to continue to be a part of the successful M&A organizations.  That creativity and that collaborative creativity.   In our Annual Report in the center section is really indicative of how IMAP cross boarder activities operate.  We wanted to do a foldout on that to demonstrate how the desire of a client in Brazil was able to be translated into the largest Brazilian investment in the Czech Republic in 2009.  And the steps and efforts that had to go in, in order for that client to realize their business plan.  I think, that is really, really emblematic of how IMAP operates.    

M.A.:  What are the criteria for joining IMAP?  We noticed that IMAP requires both English and the native language of your members.

M.E.:  IMAP is a by invitation only organization.  Our belief is that we need to take the time to get to know prospective member firms of IMAP and they need time to get to know us. So we spend a fair amount time on the front end in dialog and sharing visions.  We want to know the vision of the independent firm and as well we want them to know the IMAP vision.  And in that process if we see a mutuality and ability to grasp each of the operations of each other then we continue with the dialog and more forward.  We are looking for good strong middle market Advisors, especially in markets where we don't have a strong IMAP presence at this very moment.  We are looking in Russia, Australia and there are parts of South America we are looking at, and there are parts in Eastern Europe that we would like to have greater presence in as well, [in addition to] Asia.  We would like to have the IMAP footprint as [far] and as broad as possible.      

M.A.:  Thank you Mark.