Deal origination and investment banking is seeking deals on the buy-side (working with private equity firms to identify companies to invest in or buy) and on the sell-side (working with companies seeking to raise funding or exit). It’s not just a crucial element of successful investment banks but is now a must for all businesses seeking growth. This article will explore the top dos and don’ts of a successful deal origination and also some practical strategies that new-school firms are following to improve their efficiencies.
Traditionally, firms have relied heavily on inbound deal flow, which is sourced through their relationships with intermediaries as well as business digital data room owners. However, this isn’t a reliable way to scale the amount and quality of deal opportunities. It’s extremely time-consuming, and it’s difficult to develop accurate forecasts and targets when the number of lead sources that could be used can be unpredictable.
Many investment banks are working on sourcing outbound deals. This process involves searching for specific kinds of transactions in the areas in which they have expertise and a network of contacts. This is now increasingly done via online platforms like Axial that provide an online database of deal information.
Additionally, many investment banks use technology to automate their processes for searching and make the process of sourcing leads much simpler and more efficient. This lets them focus their efforts on establishing and managing relationships with intermediaries, while also enhancing their ability to recognize, qualify and connect to the best investment opportunities at the right time.