Deal origination investment banking involves sourcing deals on the buy-side (working with private equity firms to find companies to invest in or acquire) and on the sell-side (working with companies seeking to raise funds or exit). It’s not just a vital component of successful investment banking but has become an essential part of every business seeking to expand. This article will examine the most important dos and don’ts for successful deal origination and also some strategies that young companies are using to improve their efficiency.
In the past, businesses relied heavily on deal flow generated through their relationships and interactions with intermediaries and business owners. This isn’t an efficient method to increase the quantity of and quality of deals. It’s extremely time-consuming, and it’s hard to make accurate forecasts and goals when the number of lead sources could be unpredictably.
Many investment banks are working on sourcing outbound deals. This method involves searching for specific kinds of transactions in the areas where they have expertise and a large network of contacts. This is increasingly done via online platforms like Axial that provide an online database of deal information.
Additionally the majority of investment banks utilize technology to automate their search processes, making finding leads much easier and more efficient. This lets them focus their efforts on managing and establishing relationships with intermediaries, while also enhancing their ability to determine, qualify and connect with the most lucrative investment opportunities at the correct time.
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