Why Outsource?
Large multi-product asset managers typically operate large in-house sales teams. Many smaller managers also opt for the in-house route, with small or single person teams and necessarily limited market coverage. In-house teams remain the norm for now, but we established Black Isle because we believe this is set to change. As in-house teams within mature businesses increasingly struggle to deliver, and as new boutique asset managers emerge with alternative distribution models better suited to their needs, we believe outsourced institutional sales will prove increasingly attractive.
Models vary, but in our opinion (and in our experience), in-house sales teams are expensive, inflexible and require a long-term commitment and extensive support. They are an overhead with costs that are not directly linked to their productivity. They frequently lack focus and efficiency, spending too little time on genuine sales activity. Sales team leadership is often remote from the front line and fails to capture the market insights necessary to create an effective sales strategy.
We believe that for many asset managers attempting to raise capital from the institutional market, creating an in-house sales team is sub-optimal. Good, experienced salespeople are hard to find and expensive to hire. And with no guarantee of success, they are also expensive to replace.
Why Outsource?
It follows that outsourcing to a specialist placement agent can make particular sense in a wide variety of situations. For example:
- Smaller or single product asset managers unable or unwilling to accept the cost and inflexibility of an in-house team.
- Emerging managers lacking distribution, brand and reputation.
- Firms keen to assist the development of an in-house team through expert short-term assistance.
- Non-UK managers keen to access the UK market as efficiently and cost-effectively as possible.
- Asset managers looking to launch a new product or test the market for a new concept.
- Businesses with limited institutional connections attempting to source capital for individual deals or offering differentiated origination capabilities.
- Established players in non-institutional markets with designs to raise assets in an unfamiliar segment.
- Firms looking to build a presence in the UK institutional market before committing to an in-house sales team and local office.
The need for outsourcing may be temporary or it may be long-term. It may be driven by an overstretched in-house team or a lack of institutional or UK market expertise. Your organisation could be a UK boutique or a large overseas manager looking to expand internationally.
Whatever the situation, without an established brand and reputation it is extremely hard to open doors into the UK institutional marketplace. And ultimately doors are opened by people.
Our experience and relationships in the market offer access that would not otherwise be possible. While there are many situations in which outsourcing the capital-raising process makes sense, success is not guaranteed. However, we believe the chances of success are greatly increased if the process is outsourced to a business:
- staffed exclusively by highly experienced institutional salespeople; and
- focused solely on institutional capital raising.