Three Tips for Deal Sourcing and Origination in the New Normal

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Some of the biggest challenges that firms have faced, especially in the current deal sourcing environment, have been to maintain the relationships with  lenders; the well-being of employees; and utilizing the benefits of PPP and other government programs. Perhaps most painfully, simply maintaining the company’s overall performance has emerged as a top challenge for countless firms.

In a recent webinar, GF Data’s Andrew T. Greenberg (CEO), ACG Partner’s Ben Howe (Co-Founder & CEO), DealCloud’s Amit Lalwani (SVP Global Business Development), and Summit Partners Credit Advisor’s Gus Phelps (Principal) discussed and reviewed how they have adapted to deal sourcing with the current climate. Below, we highlight the key takeaways from their conversation:

“Utilize new communication technology.”

As firms have begun to adjust to working from home, leveraging modern communication technologies has become a necessity.  Platforms like Slack, Zoom, and Smartsheet have gained a lot of popularity to help facilitate the kinds of conversations that would have taken place in a normal working environment.

In the webinar, Ben Howe reflected on his firm’s realization of the true impact of the pandemic, stating, “it was either we get deals done without meetings, or we’re not getting deals done.”  Although many prefer to have meetings in person, digital communication can be the next best alternative to have an efficient work flow. Zoom may not completely replace face-to-face meetings with clients, but if this technology is utilized, it can make virtual meetings that much more meaningful.

Many dealmakers also opined on the importance of working hand-in-hand with the firm’s marketing and investor relations teams to get key messages out into the market. The team at DealCloud recently published a white paper outlining the key benefits of a modern capital markets communications program, which is available for download by clicking here.

“Utilize intermediaries to aid in deal sourcing.”

For some private equity firms or investment banks, a large part of the deal sourcing challenge comes from simply being too busy and not being able to dedicate the amount of time to it as they may want.  Amit Lalwani discussed DealCloud’s recent survey (which was sent to thousands of dealmakers in April at the height of the pandemic), which found that about 80% of investors expect to rely more heavily on intermediaries in the next six months.

Intermediaries – whether they be investment bankers, Main Street brokers, placement agents, or other middle men – are a value-added partner in sourcing deals, which can save time for firms and create a more efficient deal sourcing processes. While the industry has largely relied on proprietary deals to power their pipeline, the new normal demands that all relevant sourcing channels be exercised.

In addition to utilizing intermediaries, private equity firms have leveraged third-party data providers to support efficient deal sourcing in this environment.  When companies have taken extra steps to obtain verified market data, that gives them the criteria and parameters they need to prioritize outreach, activity, and opportunity.

“Accept that technology may replace the need for in-person meetings for a long time to come.”

The panelists in this webinar all agreed that nothing will beat having in-person interactions and experiences, but that at least for the time being, staying safe and keeping other safe is a top priority across the capital markets industry. When utilizing communication platforms properly, especially for the past few months, you notice the positive effects it can have.

When you are able to have in-person meetings, it may be easier to break the ice and establish a good first impression and relationship through the use of body language, and over Zoom, this impression could get lost.  The one thing that can really be used to your advantage in these situations in that institutionalized knowledge of the market, clients, and even your peers.  This knowledge will be able to differentiate you from others, and could give you the ability to say, “This is why I am the right partner for you.” Communication platforms such as Zoom may not entirely replace the need for in-person meetings, but they can definitely ease the process of deal sourcing in our current environment.

 

For more information about cloud-based solutions like DealCloud and how they are supporting the evolving needs of deal professionals, especially those that are remote, click here

 

 

 

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Author:

Mithi Shukla

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