Comparing Deal Origination Strategies

March 19, 2018

Most private equity firms source their deals using a strategy that broadly fits into one of three categories.

While no single strategy is necessarily ‘the best’, each option is most effective with different a buyer type.

Which one are you?  How do you weigh the costs and benefits to ensure you maximize deal flow?

1. The Internally managed origination effort

Firms with internal business development staff who do not rely on outside resources fall into this category.  These firms are are either very small PE shops, where principals wear many hats, or they are much larger firms that choose to manage their origination effort at scale.

Pros of this Strategy

Cons

2. Buy-side firms

It seems that most private equity buyers have some relationship with buy-side firms.  This is still the most common way to scale search efforts.

Pros of this Strategy

Cons

3. CAPTARGET origination

Our sourcing services are considered a ‘best of both worlds’ approach.  We combine the best elements of (1) internal sourcing and (2) buy-side supported search efforts.

Rather than representing ourselves as a third party like a buy-side firm, we act as an extension of client’s business development arm.  This means we source both direct and indirect opportunities for you.  This is all managed by CAPTARGET, including the prospecting, outreach and vetting of opportunities.

Pros of this Strategy

Cons

Choose the right deal origination service level for you firm here.