Deal origination investment banking involves searching for deals on both sides (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 exit). It’s more than just a critical part of successful investment banking but has become a necessity for all businesses that want to expand. This article will explore the most effective dos and don’ts to use for deal creation and also some practical techniques that new-school firms are employing to increase their efficiency.
In the past time, firms relied heavily on deal flow created through their relationships and connections with intermediaries and business owners. But, this isn’t an effective method to increase the amount and quality of deal opportunities. It is extremely time-consuming and it’s hard to create accurate forecasts and targets when the number of lead sources could be unpredictable.
Many investment bankers are focusing on outbound deal sourcing. This process involves looking for specific types of deals in areas where the investment banker has expertise and a network of contacts. This is now increasingly done via online platforms such as Axial that provide an online repository of deal information.
Additionally the majority of investment banks utilize technology to automate their search procedures and make the process of sourcing leads much simpler and more efficient. This lets them focus their efforts on managing and establishing relationships with intermediaries, while also improving their abilities to find, qualify, and connect with the most suitable investment opportunities at the right time.