Proprietary deal origination has been on the rise at PE firms over recent years. It’s no surprise as relying solely on your network, other PE firms, or investment banks is no longer an option because of the increased competition and a variety of financing, cash-out + self-serve brokerage options available to businesses. But building out a proprietary deal origination engine is a relatively heavy lift and involves multiple moving parts.

The overarching setup is very similar to a mid-market sales process where you have a large number of potential prospects, limited resources to reach them, and plenty of noise/competing priorities. It involves:

• Defining your investment criteria (or ICP)

1. • Ex: middle market healthcare and manufacturing companies in the southeast US

• Understanding the target persona/decision makers within the companies

1. • Ex: CEO, upper management and/or board of directors

• Queing up the right data/signals to identify companies and contacts

1. • Ex: Data about co size/growth, revenue, industry, funding, any alt data signals and work phones/emails, address for the target persona

• Building out messaging and a multi-channel approach to effectively reach your audience

1. • Ex: an email cadence with 8 touches, LI connection + message, phone call to high potential prospects

• Putting the right infrastructure/tooling in place

1. • Ex: CRM, email/sequencing tool, auto dialer/LI messaging

• And last but not least, allocating people resources to execute on all of the above

Don’t expect for the machine to run smoothly once you’ve set it up. Even if you have the basics in place, you’ll likely encounter a multitude of challenges like data quality, time constraints, coverage issues, etc. Dedicate some time to proactively and periodically uncover and address these issues. And, if at all possible, try to anticipate them from the get-go. 

Here are some recommendations:

• Ensure to queue up a contact provider with comprehensive coverage for your investable area
• Invest in a comprehensive company search engine that provides all/most of the info you need in one place
• Use unique signals like alternative data to gain an edge on your competition
• Invest in sales training and optimizing the setup + tailoring messaging to your audience
• Don’t put all your eggs in one basket and outsource some of the deal origination while building out/perfecting your in-house team

To learn more about how Fintent works with PE firms to help them with deal origination, check out our Private Equity/M&A page here. And if you’d like to learn more, you can book a time for an introductory call here.