Deal origination investment banking involves finding deals on the buy-side (working with private equity firms in order to find companies to invest in or acquire) and on the sell-side (working with companies who want to raise funds or sell). It’s not just a crucial component of a bank’s success, but is now a necessity for all businesses that want to grow. This article will examine the top dos-and-don’ts for effective deal-making and also some strategies that young businesses are using to improve their efficiency.
Traditionally, firms have relied heavily on inbound deal flow, which is sourced through their relationships with intermediaries as well as business owners. This isn’t the most efficient method to increase the amount of deals and their quality. It’s very time-consuming, and it is difficult to establish accurate forecasts or goals when the amount of potential lead sources can be unpredictably.
Many investment bankers are focusing on outbound deal sourcing. This process involves searching for specific types of transactions within areas where they have expertise and a network of contacts. This is becoming increasingly possible through online platforms like Axial that provide an online repository of deal information.
Many investment banks also use technology to automatize their processes for searching, making the process of finding leads much easier and more efficient. This lets them concentrate on establishing and managing their relationships with intermediaries and improving their ability to spot and connect to the most suitable investment opportunities at the right time.