Ways Dealmakers Can Save Time with Similar Deal Analysis

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Envision a scenario where a new associate is staffed on a potential acquisition and is asked to prepare key due diligence documents. In order to prepare some of these key documents, that may include financials, the associate needs a better understanding of comparable deals or is asked to compile a list of comparable properties and investments. The new associate must manually sift through file explorer, Dropbox, Sharepoint, or the firm’s sharedrive and open various Excel files and models and manually choose comparable deals and properties in an arbitrary way (no access to statistics, no consistency, and no econometrics).

 

Now imagine a scenario where the associate can access and manage deal data in one single platform. The associate can upload the DD excel model or perform deal work within the DealCloud platform using solutions such as DealCloud’s web portal, mobile app, or Outlook plug-in, and he or she is automatically given similar properties the firm has reviewed, or similar properties that have entered the market that the firm did not review. When your firm has single source of truth like DealCloud, all information surrounding firm and deal data is accountable and accessible.

 

Using the Similar Deal Analysis dashboard (below) in DealCloud, users can view details from similar deals and use that data to inform decisions for deals going forward. The Similar Deal Analysis functionality allows users to view average cap rate, similar deals by source type, similar deals by status, and view an analysis of all deals listed.

 

 

 

The user can view the deal data in detail by accessing the Deal Details dashboard in DealCloud. With this data available at the click of a button in one central location, dealmakers can save time going through Excel files and using third-party data to access this information.

 

 

Commercial real estate fund managers that want to pay the best possible price for their deals need to have the ability to see comparable investments (real estate comps). Real estate comps help fund managers accurately assess value of target properties by finding similar properties.

 

DealCloud users can view Market Comps in the above Market Comps dashboard.

 

DealCloud facilitates this process by leveraging your firm’s historical deal data as well as current pipeline to identify comparable properties and/or deals based on the characteristics such as:

 

  • Region (Zip Code, MSA, State, Region, Country, etc.)
  • Property type (Multi-family, Office, etc.)
  • Strategy (Core, Value-Add, Opportunistic)
  • Building Size and Characteristics (Area square footage, Stories, Commercial/Residential/Total Units, etc.)
  • Lot Size/Area (Square footage and/or Acres)
  • Condition
  • Age
  • Investment Type/Capital Structure (Debt/Equity)
  • Deal Close Date (Recent deals are more insightful and therefore applied higher weight in DealCloud’s Machine Learning predictive analytics)

 

DealCloud can utilize the factors above to recognize and measure deals and properties that are comparable to the deal in question and display those comparable deals and their financials/sales history in the web portal, PDF, Word document, Excel or Outlook.

 

DealCloud clients are creating Similar Scores to measure the comparability of historical deals and using the historical deal/properties with the highest similarity scores to predict key financials such as Market Value, Cap Rates, etc.

 

As a deal management system DealCloud is not only providing key insights into financials, but also allowing deal professionals to see the CRM correspondence (notes, emails, events) between internal and external properties on those comparable historical deals.

 

  • Dealmakers can see why historical deals were passed on, or invested in
  • Dealmakers can see which source type (Broker, Proprietary, JV Partner, etc.), which brokers/jv partners and originators are sourcing these similar deals
  • Dealmakers can see the deal flow for these comparable deals benchmarked to the market

 

It’s time for real estate investors to get serious about deal and relationship management technology. To learn more about how DealCloud’s state-of-the-art deal and relationship management system was built specifically for real estate professionals, schedule a demo.

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Author:

Emanuel Mesa

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