Now that summer is over, we all would like to close the year on a high note. For most private equity firms that means closing the deals within their pipeline, but it’s also important to keep the pipeline flowing as we head into the new year.
Every firm has a unique method of prioritizing and dividing the intermediary universe, however the fundamentals remain the same. The firms that have the best market coverage of relevant deals are taking advantage of tools to build their strategy and have a dedicated business development professional to lead the charge. We’ve broken down some of the best practices and methods used by deal sourcing pros to help improve your sourcing strategies.
1) Know where you stand
While improving your market coverage is the goal, it goes even further than that. First, evaluate where you stand in your specific target and then evaluate where you are against peers in your industries. It’s important to note that no firm has 100% coverage and the goal should be to be in the top quartile amongst your peer group. Quantifying the data can help set goals for next year, assist with fundraising, and even help get a raise!
2) Identify relevant intermediaries
Identifying the firms and professionals who are closing deals within your target will streamline your outreach process. You don’t want to see deals in the consumer space if you’re an industrial focused firm. We offer an Advanced Advisor Analysis (AAA) Report to our clients, which identifies trending, new, low coverage, and inactive advisors. It’s also important to evaluate the intermediaries you have a good relationship with to ensure they are sending you all the deals they’ve completed within your target. It’s easy to get comfortable with your existing relationships, but we’ve seen many firms shocked by their coverage of intermediaries they thought they had a solid connecting with
3) Know your competition
Losing the auction process to another firm is frustrating, but you can turn that loss into a gain.. Understanding your competitors allows you to stay ahead of the deals they are ready to exit. Knowing your competitors also helps get a better understanding of key intermediaries they are sourcing their deals from.
4) Get ahead of deals before they come to market
You might think this is easier said than done, but identifying firms before they come to market is possible using data and observing trends. In our latest Harvest Report, we identified more than 5,000 private equity platform investments that may be well positioned for a sale. These platforms were acquired by 2,460 unique sponsors between 2012-2016. A customized version of this report is available to our clients based on their target.
Make sure you have the right tools to succeed in your deal sourcing efforts! Whether your firm is dividing coverage by geography, firms, or industries, adding even a few of these 7 steps to your process will help you source more relevant deals. The goal isn’t to see everything happening in the market, rather it’s to focus on the deals that matter most.
Click here to read part 2.
Last week’s deals today
September 8 – 14, 2019
~120 deals traded
Deal of the week
Ventiv Technology, a Georgia based provider of risk management information systems solutions, was acquired by Tailwind Capital Group. Raymond James acted as the sell-side financial advisor and Coreview Advisors and Harris Williams served as buy-side financial advisors. Davis Polk & Wardwell provided buy-side legal advice for this transaction. No terms were provided.
Most active subsectors
- IT: Software & services
- Industrial: Misc. equipment & products
- IT: Services
- Construction: Services
- Financial: Insurance
- IT: Fintech
Most active cities
- San Diego
- San Francisco