Mining your prospective client's 10k for biz-dev jewels.

• Author: Sankstone, Shannon

In today's competitive market, it is more important than ever to know a client's business, and business development professionals expend a significant amount of resources getting to know the client. They gain valuable knowledge from news articles, Hoovers, analysts' reports and other sources, yet one of the richest, cheapest and most often overlooked sources is the client itself.

Public companies are required by the U.S. Securities and Exchange Commission to provide information to the public. There are dozens of types of mandatory SEC filings, such as those for making acquisitions or offering stock options, and they often run into the hundreds of pages. Searching for the right information can be daunting. Fortunately, there are ways to find the right information--and ignore the irrelevant--in a company's annual filing, the 10K.

A 10K Primer

The SEC requires that all publicly held companies, along with some very large private entities, submit their financial information every quarter, in a 10Q form, and annually, in a 10K form. While companies produce a similar annual report that is sent to shareholders, the 10K differs in a few important respects. The annual report is the "glossy" version of the 10K. It usually includes a chairman's statement and provides more narrative on key changes in the company. The 10K, on the other hand, provides significant quantitative information and includes explanatory, rather than anecdotal, information.

A 10K has three main parts: Part I gives an overview of the company, Part II provides financial data and Part III details the company directors and executives. Additionally, there are numerous exhibits, such as contracts and a list of subsidiaries, that can be included as Part IV. When it comes to determining business development opportunities, the most informative parts of the 10K are Part I and Part II.

Business Description

In a 10K, Part I begins with a business description--a company biography. Within the business description are nuggets of information that can be gleaned to further business development efforts. These include business strategies, research and development budgets and regulatory issues.

The contents of the business description vary according to each company; this information is not mandatory, so the company can decide what to include and exclude. At a baseline, most companies provide a narrative that is segmented according to business lines or divisions. The more robust descriptions include...