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Research Outline

Prepared for Will | Delivered September 25, 2019

PE Deal Sourcing Strategies

Goals

To learn more about innovative strategies for sourcing deals / investments in the private equity space for background research.

Early Findings

  • The average PE investor reviews at least 80 investment opportunities before finally making a single investment.
  • "It can take a team of 3 institutional investors up to a year to capture a single transaction."
  • An in-house team is what the top 10% of PE firms go for. According to a research, there are between 0.75 and 1.25 deal sourcers for every generalist investment professional in these firms.
  •  Fee-for-service deal sourcing is the emerging trend in deal sourcing in the industry. "These services typically will do direct outreach on behalf of a partner client to generate conversations with potential sellers. It looks and feels like it is conducted by the buyer themselves."
  •  Hiring M&A intermediaries to source deals on the buyer's behalf has been a trend in the industry since long.
  •  Deal platforms are another method that is used for deal sourcing. Examples of such platforms include Axial and Intralinks Dealnexus.
  • Looking for deal signals is an advanced method used for deal sourcing. In this method, PE firms "engage in an origination strategy where they actively look for companies that are sending up deal signals."
  • Some firms also employ sector-specific strategies to look for deals in targeted sectors.