Deal origination investment bankers source deals both on the buy-side and working with private equity firms to find companies for investment or acquisition, as well as on the sell side (working with companies seeking funding or an exit). It’s not just a crucial element of successful investment banks, but has become a critical necessity for any business looking to grow. This article will examine the top dos and don’ts of effective deal origination, along with some practical strategies that new-school firms are following to improve their efficiencies.
In the past, businesses relied heavily on deal flow produced through their relationships and contacts with intermediaries and business owners. This isn’t a reliable method of increasing the number of deals and the quality. It’s time-consuming and difficult to establish accurate goals and forecasts when the quantity of lead sources fluctuates.
Many investment bankers are focussing on outbound dealsourcing. This method involves searching for specific types of transactions within areas where they have expertise and a network of contacts. Increasingly, this is done through online platforms, like Axial, that provide an integrated repository for deal details.
Many investment banks also employ technology to automate search procedures, making the process of sourcing leads easier and more efficient. This allows them to concentrate their efforts on managing and establishing relationships with intermediaries, as well as improving their abilities to recognize, qualify and connect with the most lucrative investment opportunities at the right time.
