Deal origination in investment banking entails sourcing 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 who want to raise funds or sell). It’s not only a key part of successful investment banking however, it’s now an essential requirement for all businesses that want to expand. This article will discuss the most effective dos and don’ts to use for deal origination and will also provide some strategies that young businesses are using to improve their efficiency.
Traditionally, companies have relied heavily on inbound deal flow sourced through their relations with intermediaries and business owners. But, this isn’t a reliable way to scale the number and quality of deal opportunities. It’s extremely time-consuming, and it’s challenging to make accurate forecasts and goals when the quantity of potential lead sources can be unpredictable.
Many investment banks are working on sourcing outbound deals. This method involves searching for specific types of transactions in areas where they have expertise and a solid network of contacts. The majority of the time, this is done via online platforms, like Axial which serves as an integrated repository for deal details.
In addition the majority of investment banks utilize technology to automatize their search processes and make the process of sourcing leads easier and more efficient. This lets them concentrate on building and managing their connections with intermediaries and improving their ability to identify the right opportunities, qualify them and connect with the most suitable investment opportunities at the right moment.