Deal originators and investors alike are searching for unique ways to use data to navigate this market and exploit market opportunities to improve fund performance. SPS prides itself on its deal sourcing intelligence; this includes its ability to generate new use-cases to slice data to direct users in the right, albeit different direction than their peers. One example of this is its latest customized advisor report, which is available to clients’ on-request.

What is the advisor report?

The core use-case of the new advisor report is to distill a large list of active and relevant advisors into specific subcategories. This segmentation results in a higher ROI, as each subcategory can be targeted using different strategies. Currently, the market is witnessing an expansion, with plenty of expensive deals for the taking. For an originator, using the same, tried approach will only bring in more of the same, expensive deal-flow. It is important to focus on certain types of deal flow that better fit your investment criteria, strategy, and budget. If you do not want to review a large number of pricey deals that everyone else in the market is seeing, then you should be specific in the identification and targeting of your deal sources.

Think of this process as an algorithmic or holistic approach to deal sourcing. This sourcing strategy is not only implemented to differentiate your process, but also to develop a workflow that is consistent with the firm’s objectives and core values. More importantly, once this process is implemented it needs to be reviewed, evaluated, improved, and be able to be replicated, with the appropriate frequency. Finally, probably the most important piece of this process are the action items, meaning, this process should be followed by specific actions that are measurable and able to give credit back to this process. This will determine if the process of analyzing advisor relationships is fruitful, and what should be tweaked for future analysis.

That all sounds great! But, what exactly is this advisor report that SPS can prepare?

Below is a summary of sample client, XYZ Capital, and its advisor report compiled by SPS. This summary involves analyzing XYZ Capital’s internal advisor relationships against SPS market data to evaluate:

  • Trending Advisors: Firms that have completed more relevant deals based on a client’s specific criterion in the most recent LTM, compared with previous LTM periods
  • New Advisors: Intermediaries that XYZ Capital does not have in its internal deal data
  • Low Coverage Advisors: Intermediaries that XYZ has a low coverage rate, but these are active firms

Sample Analysis: XYZ Capital

Transaction Value Range: $50-$250 MM EV

Deal activity time-period: 7/1/2015-6/30/2018

  1. Trending Advisors
    • 35 intermediaries have completed more deals in the LTM June 2018 period, than the average of the previous two periods (LTM June 2017 and LTM June 2016).
  2. New Advisors
    • 51 intermediaries did not exist in XYZ Capital’s deal data, but were active in the LTM June 2018 period.
  3. Low Coverage Advisors
    • 43 intermediaries currently have an individual market coverage percentage below XYZ Capital’s overall percentage, and were active in the LTM June 2018 period.

Generally, sponsors should presume that their current process leaves something to be desired, and that there’s always room for improvement. Paring down a massive list of advisors can significantly impact how many existing relationships need some TLC, how many advisors are new and worth pursuing, as well as the potential follow-up for advisor coverage assignments in tandem with SPS Alerts. However, this information can only be meaningful if it is distilled in an algorithmic approach that can be implemented, include actionable-items, and be measurable.

If you are interested in reviewing your own advisor report, or learning more about SPS customized analysis, give us a call.



Last week’s deals today

September 10 – 14, 2018

~86 deals traded


Deal of the week

Equity investor, H.I.G. Capital acquired Reliant Rehabilitation from sponsor firm DW Healthcare Partners. Deutsche Bank Securities acted as the sell-side advisor. Based in Plano, Texas Reliant Rehabilitation provides rehabilitative therapy services to patients residing in long-term care facilities.


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