The ultimate guide to deal origination

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As capital markets dealmaking continues to intensify and become more competitive, streamlined, and efficient, effective deal origination is more critical than ever. With consistent strategies for driving deals into your pipeline, you can more easily find the right buyers and sellers, increase deal flow, and close deals faster.

In this deal origination guide, we’ll walk you through what deal origination is, how the process works, and the top strategies firms use to source more and better deals.

What is deal origination?

Deal origination is the sourcing of investment opportunities by private equity (PE) firms, venture capital firms, and investment banks. It involves generating deals to pitch to potential buyers, and it is the first step in creating a deal. Successful investing is built on a foundation of effective deal origination.

By sourcing deals, finance professionals leverage connections and use research tools to gain knowledge of the deals taking place in capital markets so they can make competitive bids or create deals through intermediary relationships.

Through deal sourcing, investment professionals such as those at venture capital firms, investment banks, and private equity firms identify new opportunities in the market. They also pitch their services and share how they can assist prospects and clients through services like M&A transactions, corporate finance, and sell-side opportunities.

Keeping a pipeline full through consistent deal origination is one of the most challenging parts of working as a finance professional—which is why new deal sourcing technologies are emerging that support dealmakers searching for their next big close.


Understanding deal origination

The goal of deal origination is to ensure and maintain viable deal flow. Your deal origination process will involve a great deal of relationship-building, along with pitching buyers and lead generation.

Deal origination involves:

  • Gaining knowledge of the deals in the market so you can place bids
  • Creating deals through your connections, with one or more of the parties involved
  • Generating leads and managing relationships with deal sources like investment bankers and vendor and buy-side intermediaries
  • Sourcing buy- and sell-side opportunities

To identify the largest amount of investment possibilities, you must leverage your network of contacts, maintain a good reputation in your industry, and establish yourself as a reliable investment professional.

Regardless of your firm’s size, effectively scaling the number and quality of deals that flow into your practice every year is key to your business development. Teams should always be on the lookout for new deals and new best practices tips to improve deal flow.

Your firm can use a variety of different strategies to source deals. Consider these possibilities for finding opportunities.


The top 4 deal origination strategies

Discover new opportunities in your existing network of contacts

While things are constantly shifting with deal origination processes, one thing is certain: the best deals are likely to exist within your team’s collective network.

New, purpose-built CRM and relationship management technology is putting this network at the forefront of the dealmaking process. By using AI-driven algorithms to score the relationships in your team’s collective network, you can more easily identify potential introductions to new opportunities.

These scores also show which relationships may need more attention before a deal is ever on the table. By building stronger relationships and expanding your network, you can get ahead of the deal origination process.  

Develop or hire a dedicated deal origination team

Deal origination is a time-consuming process, and it’s a huge part of any capital market professional’s job, so the most successful firms are either outsourcing some (or all) of their deal sourcing tasks to contracted specialists or establishing full in-house deal sourcing teams.

Automated software solutions like SlyBroadcast have also made it easier to automate some deal sourcing. These tools allow you to send non-intrusive, pre-recorded voice messages to your contacts can also be a helpful addition to your deal origination toolkit. Make sure you only send automated messages to people who are expecting to receive follow-up messages from you to avoid being labeled as a telemarketer or spam caller.

Outsourcing or automating deal origination may seem off-putting if you’ve built your practice around personal relationships, but these methods can be used side-by-side with traditional approaches to help you scale your deal origination efforts. Generating some initial warm leads is possible through these approaches, and with proper personal follow-up from you, these leads can turn into lucrative deals for your firm.

If you have the resources, the strongest (and most personable solution) is still to establish an in-house deal sourcing team to oversee the entire deal origination process. This team is typically made up of experienced finance professionals with a successful track record for deal origination. They are hired on a full-time basis to generate leads and keep up consistent deal flow for your firm.

Online and social media outreach

With a wide variety of online tools at your fingertips, connecting virtually with business owners, startups, target companies, and referrals has never been faster or easier.

You can obtain warm leads from company websites, or use social media sites like LinkedIn to connect with target companies and follow up regularly in a more casual setting.

Creating content using blogs, video channels, or podcasts can also play a huge role in your deal origination strategy by helping your team build authority and credibility.

Gain a competitive advantage with the right deal origination software platform

To succeed in investment banking, venture capital, and private equity, a solid deal origination strategy is a must.

An effective deal sourcing platform can give your firm a competitive advantage by helping you source more and better deals. Today’s leading firms use deal origination software that improves deal flow by identifying buyers and sellers faster, so you can spot opportunities and move more quickly.


Creating more investment opportunities with a relationship intelligence platform

For finance professionals working at VC firms, investment banks, and PE firms, deal origination is the first hurdle to climb when trying to close their next big deal.

Casting a wide net is the best way to scale your deal flow, and the best way to do that is by using a diverse range of deal origination strategies. By using a combination of traditional and online deal sourcing and relying on technology to support new deal origination efforts, you can ensure a large volume of deal flow to maintain a solid pipeline.

Deal origination starts with an introduction, and the best route to a proper introduction is through the data that exists in your team’s network. Intelligent CRM technology like Affinity empowers your team with relationship intelligence—insights into your team’s collective network, business connections, and client interactions that help you find, manage, and close more deals faster.

Talk to a member of the Affinity sales team—or watch one of our webinars with industry leaders—to find out how the Affinity Relationship Intelligence CRM can give your firm a competitive edge with stronger, faster, better deal origination.


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