Deal origination and investment bankers are able to source deals both on the buy side and working with private equity firms in order to locate companies for purchase or investment, and on the sell-side (working with companies seeking financing or an exit). It’s not just a vital component of successful investment banking however, it’s now an essential requirement for all businesses that want to expand. This article will discuss the most important dos and don’ts for successful deal origination and some of the most effective strategies that new-school firms are employing to boost their efficiency.
Traditionally, firms have relied heavily on inbound deal flow that they sourced from their relations with intermediaries and business owners. This isn’t a reliable method to increase the amount of deals and the quality. It’s extremely time-consuming, and it is difficult to develop accurate forecasts and goals when the quantity of lead sources available can be unpredictably.
Many investment bankers are focusing on outbound deal sourcing. This process involves looking for specific types in areas where the investment banker is knowledgeable and has a network of contacts. This is often done through online platforms like Axial that offer a central repository of deal details.
In addition, many investment banks use technology to automatize their search processes and make sourcing leads much easier and more efficient. This allows them to concentrate their efforts on managing and building their relationships with intermediaries while also improving their abilities to find, qualify, and connect with the best investment opportunities at the correct time.