Deal origination investment banking involves seeking deals on the buy-side (working with private equity firms in order to find companies to invest in or acquire) and on the sell-side (working with companies seeking to raise funds or sell). It’s more than just a critical element of a successful investment banking however, it’s now required for all businesses that want to expand. This article will discuss the key dos and don’ts of effective deal sourcing, as well as a few practical strategies that young companies are implementing to increase their efficiency.
Traditionally, firms have relied heavily on deal flow from their connections with intermediaries and owners. This isn’t an efficient way to increase the number of deals or the quality. It is extremely time-consuming and it’s challenging to establish accurate forecasts or goals when the quantity of lead sources that could be used can be unpredictably.
Many investment banks are making an effort to source outbound deals. This method involves looking for specific types in areas where the investment banker has experience and a network of contacts. This is often done through online platforms like Axial that offer a central repository of deal information.
Many investment banks also use technology to streamline search processes, making finding leads much easier and more efficient. This allows them to focus their efforts on managing and developing their relationships with intermediaries as well as improving their abilities to determine, qualify and connect to the best investment opportunities at the right time.