Successful, well-managed deal origination and deal sourcing are essential to private equity (PE) success. The average PE firm evaluates 80 opportunities before closing a single investment.
And to get to that one deal, you need a small army. Bringing a deal to close requires, on average:
- 20 meetings with the management team
- 4 negotiations with target companies
- 3 due diligence reviews
- 3 full-time investment deal team members
With the extensive resources required for every deal won, it’s no wonder that private equity firms are constantly searching for better strategies and tools to streamline their deal origination process.
Read on for private equity deal sourcing tips that can keep your firm ahead of the competition.
Key takeaways
- With only a small percentage of private equity deals making it across the finish line, efficient and high-quality deal sourcing is critical.
- Leading PE firms are boosting their deal sourcing strategies with data-driven decision-making, pipeline analysis, brand-building, and relationship intelligence.
- Affinity CRM helps PE firms improve their deal sourcing processes to find and close more quality deals.
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How leading PE firms are upleveling their deal sourcing strategy
PE firms spend a significant amount of resources sourcing the best deals. Even so, only about one in five term sheets issued end up closing.
So, the most effective PE firms are constantly looking for new ways to improve their business development efforts. Here are some strategies that leading firms are using to efficiently source more high-quality deals.
1. Proactively monitor investment signals
Monitoring key deal signals allows you to source high-potential opportunities that align with your fund’s investment thesis—and get to them before your competition.
Signals that point to growth potential include:
- Rapid growth in revenue or profit
- Presence in fragmented markets with consolidation opportunities.
- An experienced, proven management team.
- Growing market share or signs of category leadership.
Liquidity signals include:
- A large corporation shedding subsidiaries.
- Death, disease, or divorce (“the Three Ds”).
- Older CEO seeking retirement.
- Consolidation in the industry.
The key to getting ahead is being proactive. Firms that are the first to find brands gaining traction and attention can better assess market position and sentiment.
Third-party data and trusted industry sources enable firms to spot these deal signals faster and build strong deal flow. A CRM that connects with key data sources like Pitchbook and Crunchbase can give your firm a leg up with access to the industry trends and signals that point to strong deals. For example, Affinity Sourcing provides you with 200,000+ investment-relevant companies with proprietary data, growth signals, and relationship intelligence to point you to deals first.
2. Analyze your pipeline to understand what drives success
While deal signals can help PE deal teams find lucrative opportunities, leading indicators usually aren't enough on their own. According to our 2025 private capital predictions report, almost half (46%) of dealmakers believe that one of the biggest opportunities for data is using it to source deals more efficiently.
Top-performing PE firms use analytics and reporting dashboards to help identify potential deals based on past successes. With this information, they can make more data-driven decisions about their next investment and replicate winning sourcing strategies.
Some key pipeline metrics to keep an eye out for include:
- Pipeline conversions: How many deals end up moving from origination to close? What about in between pipeline stages or from different sources?
- Win/loss patterns: What characteristics do your lost and won deals have in common?
- Time to close: How long does it take for a deal to close? How long do deals spend in each pipeline stage?
Identifying these drop-off points helps you close those gaps, so no opportunity slips through the cracks. Your PE tech stack should help you monitor pipeline progress and performance so you can continue to optimize your investment process. Custom dashboards also make it easier to share deal-relevant information with important stakeholders like senior leaders, prospective clients, or co-investors.
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3. Use your investment thesis to guide sourcing
Deal volume matters when sourcing investment opportunities, but volume alone means nothing if the deals don’t fit your investment thesis. It wastes time and resources that could be better spent on relationship-building and closing more promising deals.
You need strong conviction in your private equity fund’s investment criteria at the sourcing stage to spot high-fit opportunities and disqualify mismatches earlier. This keeps incompatible deals out of your pipeline and saves time at the due diligence stage.
Sticking to your investment thesis also shows limited partners (LPs), intermediaries, and other stakeholders that you know exactly what you’re looking for—building confidence in your area of expertise.
4. Create a feedback loop between portfolio teams and deal sourcing
Your portfolio companies and operating partners can bring valuable deal sourcing insights from the other side of the table. They often have first-hand understanding of the unmet needs of intermediaries and can offer real-time insights into market opportunities.
Keeping a consistent touchpoint between sourcing teams, LPs, portcos, and senior leaders keeps this information flowing. It gives portfolio teams a platform to share vendors, customers, or competitors that could be interesting merger and acquisition (M&A) targets or potential investment opportunities.
Follow up with these contacts regularly to prevent these relationships from growing cold. Relationship-driven CRMs, like Affinity, make it possible to set reminders to reach out at the right time while giving you a nudge if you haven’t connected in a while.
By prioritizing these relationships, you create a feedback loop that extends beyond your existing portcos—broadening your access to new investment opportunities.
5. Build your brand
PE investments are a two-way street. Firms want to invest in deals with a high likelihood of strong returns, but companies want more than just capital—they’re looking for reputable, industry-leading investors at the best possible terms. They want a partner who brings expertise, resources, and network connections that help grow their business.
In a recent Affinity survey, dealmakers identified rising competition and growing pressures on fundraising as key factors impacting deal flow in 2025. With more firms vying for the same opportunities, reputation and recognition are more important than ever. A strong brand reassures intermediaries that you’ll add value to the cap table, improving win rates and even outreach conversions.
There are many ways to build your brand, such as:
- Demonstrating expertise through thought leadership and participating in industry events
- Increasing recognition through digital and social media presence, such as on LinkedIn or X
- Instilling confidence in the firm by hiring top-tier talent
- Creating trust through testimonials and word-of-mouth referrals through your network
Building a brand extends far beyond the surface. In PE, even your network can help improve your brand. There are many types of relationships you can foster, including with existing portcos, investment banks, attorneys, peer private equity firms, executives, and other sponsors. Your relationships with these contacts can create the trust, confidence, and recognition that make for a valuable brand.
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6. Use a relationship intelligence CRM platform
Relationship intelligence—insights into your team’s network and interactions—is changing how deals and connections are managed and used.
No matter how much of the deal sourcing process is automated, finding high-quality investments remains a very human activity. “Private equity is very much a relationship business,” shares Brian Smiga, Partner and Co-founder at Alpha Partners.
Maintaining high-quality relationships and leveraging them to find potential investments will make the deal process faster and smoother. You can use your network to your advantage by choosing deal sourcing tools that help you stay focused on your most important relationships, like the Affinity CRM.
“I think without Affinity, new associates and analysts have a much longer learning curve, and it takes them much longer to build a book of relationships,” Smiga continues.
Affinity turns relationship insights into quality deal flow while centralizing your deal pipeline. By capturing interactions in your team’s inbox and calendar, you can get a better understanding of the strength of every relationship across your firm. This allows you to prioritize your pipeline based on the strongest relationships in your network, while making sure no relationship goes cold.
Knowing that deals with warm introductions close faster, Affinity also surfaces paths of introduction to key decision makers at target companies. By focusing on relationships and the value in your existing network, relationship intelligence platforms ensure your team doesn't miss out on a deal because you haven't checked in with an old contact for six months.
The future of private equity deal origination
Despite market uncertainty, private equity remains strong—with Q1 2025 deal values more than doubling year-over-year. But with early-stage startups appearing at record rates, dealmakers are being more strategic with the deals they choose to pursue, focusing their efforts on finding the right deals. When asked which activity dealmakers plan to focus on in 2025, 50% said new deal sourcing—up from 30% last year.
Of course, this means that the best deals are highly competitive, with new opportunities often coming off the market before they make it on the radar of many firms. With dry powder at historically high levels and competition for quality assets intensifying, firms are under growing pressure to originate differentiated deals.
The most successful PE firms are reevaluating their deal origination strategies to reach these deals first, doubling down on data and relationships to generate as many high-quality investment opportunities as possible. Tech-forward private equity firms are turning to PE deal sourcing platforms that support their deal sourcing strategies, high-level investment strategies, and deal origination processes beyond just contact management.
Why leading PE firms choose Affinity for smarter deal sourcing
Affinity is trusted by leading private equity and venture capital firms to help find, manage, and close the most valuable deals. Built with dealmakers in mind, Affinity harnesses industry-leading automated relationship intelligence insights to help your firm discover deals earlier on.
Over 3,000 private capital firms use Affinity to:
- Uncover paths of warm introduction that close deals faster with robust relationship intelligence that provides insight into historical interactions.
- Track and nurture key relationships—while minimizing manual tasks—with automated activity capture
- Make more informed, data-driven deal decisions with confidence by enriching CRM data with proprietary and third-party insights
- Evaluate pipeline performance and identify winning behaviors with real-time analytics and reporting
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PE deal sourcing FAQs
How can PE firms find proprietary deals?
PE firms can find proprietary deals and improve their deal sourcing efforts by staying on top of key investment signals, analyzing their pipeline, and using relationship intelligence platforms, like Affinity, to build better relationships with important contacts.
What metrics should deal teams track to improve sourcing performance?
Metrics that deal teams can track to improve sourcing performance include:
- Deal flow and volume
- Deal size
- Pipeline conversion and win rates
- Time to close
These metrics give deal teams a better understanding of the sources and behaviors that lead to winning deals, so they can fill their pipeline with the right opportunities.
Why are relationship intelligence platforms becoming essential for private equity firms?
Relationship intelligence platforms are becoming essential for private equity firms because private equity is an increasingly relationship-driven industry—with deals often coming from within a firm’s network. Keeping key relationships warm builds trust and helps you stay top of mind when the next big investment opportunity comes to life. Relationship intelligence CRMs, like Affinity, make it easy for private equity investors to nurture relationships within their network so they never miss a promising deal.
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