Deal sourcing or deal origination is a term used by

finance Finance is the study and discipline of money, currency and capital assets. It is related to, but not synonymous with economics, the study of production, distribution, and consumption of money, assets, goods and services (the discipline of fina ...

professionals such as

private equity In the field of finance, the term private equity (PE) refers to investment funds, usually limited partnerships (LP), which buy and restructure financially weak companies that produce goods and provide services. A private-equity fund is both a ty ...

investors and

investment bankers Investment banking pertains to certain activities of a financial services company or a corporate division that consist in advisory-based financial transactions on behalf of individuals, corporations, and governments. Traditionally associated with ...

to describe the process by which firms identify investment opportunities. The term can apply to venture capital or private equity. Ensuring that a larger volume of deals are sourced is imperative to keeping up a viable

deal flow Deal flow is a term used by finance professionals such as venture capitalists, angel investors, private equity investors and investment bankers to refer to the rate at which they receive business proposals/investment offers. The term is also use ...

. Thus, most

venture capitalists Venture capital (often abbreviated as VC) is a form of private equity financing that is provided by venture capital firms or funds to start-up company, startups, early-stage, and emerging companies that have been deemed to have high growth poten ...

private equity investors In the field of finance, the term private equity (PE) refers to investment funds, usually limited partnerships (LP), which buy and restructure financially weak companies that produce goods and provide services. A private-equity fund is both a ty ...

, and

use various methods and origination strategies to source deals. While some firms reach out to teams of specialists to help with the deal sourcing process, others may use in-house resources. Investment banks usually provide deals to both the buy-side and the sell-side. Both buy-side and sell-side opportunities are sourced.

Traditional approach

Deal origination largely depended on a broad network of contacts and a good reputation. Having an industry-specific knowledge and an idea of similar deals taking place in the market was considered an added advantage with respect to placing a bid. The traditional deal origination method establishes direct relationships with owners of companies. Private equity firms focus efforts on certain industry verticals or sub-sectors based on fund mandates and portfolio composition. Buyers may cultivate these relationships directly, engage a specialized third party to proceed with a proactive approach, or rely on passive methods including online deal sharing forums, or sell-side processes. Specialized third parties consist of buy-side consulting firms.

Online deal sourcing

Traditional methods of deal origination are fast giving way to online deal sourcing platforms for buy-side and sell-side opportunities. Several financial technology companies around the world provide services to users to enable them to go beyond their network of contacts and source deals on the basis of a variety of criteria. In addition, online deal sourcing is considered vital in M&A transactions. There are various online deal sourcing platforms available.

References

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External links

The definition o
Deal sourcing
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Traditional approach

Online deal sourcing

See also

References

External links