Success as a deal originator is both an art and a science. Cultivating relationships and sourcing deals involves a certain gravitas, that even the most discerning professionals don’t enjoy. Yet, with the accumulation of vast amounts of data, the lines between art and science are blurring with more and more professionals applying actionable data to their deal sourcing practice. If you can check the following three items off your list, then you are a deal originator extraordinaire.
Keeping up with the new deal sources
The first step to building a solid deal sourcing process and pipeline is having access to actionable data, and more importantly, a means to continually procure and refresh this data. Incorporating a system to keep contact data current, and to reach out to new intermediaries before your peers, will set your sourcing strategy apart from the competition.
Cross-referencing your deal pipeline with SPS market data (and slicing the market by your portfolio strategy), provides a snapshot of relevant, new deal sources. Based on SPS data, there are approx. 140 new intermediaries every year that do a deal for the first time – that’s one every second business day! By integrating data intelligently, you can maintain actionable and up-to-date contact information of new intermediaries and sponsors to reach out to, that relate to your investment criteria. This automation will allow you to focus your attention on the parts of deal sourcing that require that human-touch in relationship building.
Strengthening existing relationships
The second step to achieve best in class deal sourcing is strengthening existing intermediary and/or sponsor relationships. To do this, a process should be in place to follow up on missed deals as a means to determine why your firm wasn’t notified of the deal, or perhaps it’s an opportunity to clarify your firm’s investment criteria.
The SPS Portal provides real-time data and an interactive dashboard that highlights the deals, firms, and professionals that should be on your radar. This data combines the power of SPS research, tailored to the subscriber’s investment criteria, to help firms achieve best in class deal sourcing.
- Be the first to hear about deals closing in your target, with information on the intermediaries, professionals, and how to contact them.
- Newly active firms and professionals that closed a deal in your target for the first time? Be the first to call, say congratulations, and ask about what they are working on right now.
- Broken deal alerts: Notify you when high-priority deals from your internal pipeline didn’t trade.
On this harvest moon
The final check box in your quest to be a best in class deal originator involves developing and incorporating a solid foundation for a continuous, data-driven communication of your deal-sourcing strategy to LPs. To be successful, benchmarking tools and reports are an important means to validate and communicate the success of your strategy. Using the SPS Portal, there are several features available to build materials to manage and showcase progress:
- Market Coverage: How well is your firm covering its market of deal sources? On the SPS Portal dashboard, users can easily navigate and manage market coverage of relevant deals and intermediaries, toggle customized datasets, and qualify which deals were relevant. When preparing materials to share, break out your coverage by sector, size range, geographies, etc.
- Peer Comparison: How does your market coverage compare to others in your peer group? As part of SPS’ annual DOBR, users can compare their coverage to the sponsor market in general, as well as your relevant peer group.
- Logged Deals: What percent of your logged deals closed? Analyze your deal-log within the SPS Portal to illustrate which deal sources are the most productive to your current strategy. Also, highlight your ability to track down and close broken deals in a systematic way.
- Marketing Trips: Easily showcase productive marketing trips. The SPS Portal identifies the top metropolitan areas that a user should be travelling to, based on relevant professionals, sectors, size range, etc. Showcase this result to LPs: “We visited ten cities to meet with more than 75 relevant professionals .”
Best in class deal originators aren’t developed overnight. It’s a skill that takes experience and industry knowledge. However, by triumphantly checking these items off your list, this honor could be bestowed to you. This checklist is here to offer you a leg up in this highly competitive environment, as well as a path towards better fund performance.
Last week’s deals today
March 25 – 29, 2019
~77 deals traded
Deal of the week
Blackstone Group completed its acquisition of Servpro Industries for $1 billion (per the WSJ reporting, as terms were not disclosed). Harris Williams acted as the sell-side financial advisor and Bass, Berry & Sims acted as the sell-side legal advisor. Based in Gallatin, TN, Servpro is a provider and franchisor of residential and commercial restoration and cleaning services in the United States and Canada.
Most active subsectors
- IT: Software & services
- Financial: Services
- Materials: Chemicals, minerals, & plastics
- Food: Food related products & services
- Services: Data & information
Most active cities
- San Francisco
- Los Angeles