Deal origination and investment banking is seeking deals on the buy-side (working with private equity firms in order to find companies to invest in or buy) and on the sell-side (working with companies seeking to raise funds or even exit). It isn’t just a key types of synergies element of successful investment banks but is now a must for all businesses that want to grow. This article will review the top dos-and-don’ts for effective deal origination and some effective methods that the new generation of firms are employing to boost their efficiency.
Traditionally, companies have relied heavily on inbound deal flow, which is sourced through their relationships with intermediaries as well as business owners. However, this is not an effective way of increasing the number and quality of deal opportunities. It’s a lengthy process, and it’s hard to establish accurate forecasts or goals when the number of lead sources that could be used can be unpredictably.
Many investment banks are focused on sourcing outbound deals. This involves searching for specific types of deals in areas where the investment banker has expertise and a network of contacts. This is becoming increasingly possible through online platforms like Axial which provide an online database of deal information.
In addition that many investment banks utilize technology to automate their search procedures and make the process of sourcing leads much simpler and more efficient. This allows them to focus their efforts on establishing and managing relationships with intermediaries, while also improving their ability to determine, qualify and connect with the most suitable investment opportunities at the correct time.
