Guide to M&A deal sourcing and origination best practices

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Deal sourcing is fundamental to M&A activity and represents the first stage of any transaction. It involves identifying possible investment opportunities, favorably positioning your firm to prospective buyers and sellers, generating leads, and managing relationships with potential intermediaries.

In this beginner’s guide to M&A deal sourcing, you’ll learn the steps of the M&A deal origination process and discover the deal sourcing strategies that deal teams use to identify potential targets and build relationships with buyers and sellers. You’ll also learn how leading teams are using deal sourcing software and other new technologies to accelerate their M&A deal flow pipeline.

The M&A deal origination process

Private equity firms, investment banks, venture capitalists, and other finance professionals all rely on the sourcing process to find investment opportunities. The M&A deal origination process is unique in some ways, however.

During deal origination, your goal is to identify targets for acquisition based on clearly defined criteria like strategic fit, competition, and financial performance.

The M&A deal origination process happens in one of two ways:

  1. You contact parties in the market who are looking to close transactions in the market, like business owners and technology companies
  2. Parties in the market contact you about their willingness and availability to close transactions

The smaller your company or firm is, the more likely it is that you will need to be proactive in sourcing your own proprietary deals. Good deals—whether they are sell-side opportunities or buy-side deals—generally won’t arrive on your doorstep unsolicited. 

There are many approaches to deal sourcing. Some companies use dedicated in-house teams to handle deal origination and some engage with investment banks or other advisors—but no matter what your approach is, having a wide network of contacts is crucial.

During deal sourcing, acquirers and investors seek to tap into the widest possible pool of potential target companies, so they can expedite deals and streamline their workflow.

The best methods for M&A deal sourcing

Build and refine your database

Building a database of potential investment opportunities is critical. Pick a target industry, and start collecting contacts within that target industry by conducting outreach via social media, online research, and networking.

You may also consider purchasing a list from an industry association or a third-party database like CB Insights, Pitchbook, Factset, or S&P Market Intelligence. Leading M&A software platforms automatically enrich your existing datasets with external data partner information, so you can build your database even faster.

Refine your initial list. Categorize your potential opportunities into “A” and “C” deals that will protect you from getting too aggressive or missing out on deals. To categorize acquisition targets, consider what types of deals you’re looking for. What deal size is right for your firm? What is the valuation of each company you’re evaluating? Are your targets realistic or unrealistic? Is the geography of a particular company a factor in your decision-making? Is your niche too narrow, or too broad?


Deals on your “A” list should be strong M&A targets that are ideal in size and are a strategic fit. Ideally, you want to end up with a list of about 25 targets on your top strategic targets list.

Monitor the news and other trigger events every day so you can continue to add to and refine your list over time.

Keep your website updated

When startups and middle-market companies are looking to sell their businesses, they often start their search online by seeking out investment banks and other investors in their region or specialty. A clear, professional website that is optimized for search engines will ensure that your firm shows up in front of prospects when they are searching for possible investors.

Maintain a clear, professional website that spotlights your team’s capabilities. Keep the site updated with regular content—including videos, podcast episodes, or blog posts—that your potential M&A targets will find useful. Continue to tell your business’s story and build a strong brand that companies can trust.

Keep your network engaged

All M&A deal origination involves long-term networking, and building a robust network is the key to maintaining quality deal flow. Often, investment bankers act as intermediaries in deals by bringing two sides together—including parties that are completely unknown to each other. The more time you can spend on relationship building, and the better your reputation is, the more consistent your deal sourcing will be.


Build relationships with strategic investment opportunities by practicing smart, consistent follow-up practices. Using a variety of messages including phone calls, LinkedIn messaging, and email communication, you’ll develop quality relationships with potential acquisitions and investors. 

Spot opportunities when companies change strategy

Changes in strategy or technology platforms within companies can also lead to acquisition opportunities for investment banks. A small company might be about to spin off a larger business unit. That spin-off company might not be meeting the objectives of its original parent company, but it could still be attractive to other acquirers like private equity firms and venture capital firms.

Use an M&A deal origination platform

The world’s most successful M&A dealmakers use online deal sourcing platforms as part of their deal origination process, so they can build long-lasting, engaged relationships with target companies and others in their network of contacts.

M&A deals are complex and long-term, on the buy-side and the sell-side, and it’s easy to lose track of key relationships across the many deals you’re managing. Use a modern CRM to keep tabs on all the players in your M&A investment opportunities and stay in touch consistently.

How leading M&A professionals consistently source deals

If your firm is still using Excel spreadsheets to manage M&A deal sourcing and track workflows, it might be time to consider a better solution. 

Affinity’s M&A software platform eliminates manual data entry by automatically capturing information from emails, calendars, and public sources. This not only dramatically reduces the risk of errors, but it also saves your entire deal team hundreds of hours per year so you can focus on building relationships and filling your pipelines with quality deals.

Affinity’s relationship intelligence algorithm can help your team source high-quality M&A deals by:

  • Capturing a complete historical view of communication and activity, showing your team’s interactions with a contact or a company, and ensuring consolidation of the information.
  • Instantly calculating relationship strength with Affinity’s patented relationship scoring.
  • Creating custom lists of relevant connections by location, industry, and investment stage.
  • Setting smart triggers and reminders so important contacts or deals don’t fall through the cracks.

Talk to us today to learn how relationship intelligence can help your firm source more M&A deals and stay ahead of the competition.


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