Deal Origination Call Tips

Hi all,

I recently started interning at a PE firm as a business development associate. I will be trying to bring in greater deal flow by contacting investment bankers, brokers, and corporations. I was curious to see if anyone had any tips or advice on how best to go about sourcing deals?

Any tips or advice would be much appreciated!

 

Create a pipeline of bankers / intermediaries / companies in Excel using whatever CRM system / database your firm uses. Call on those contacts, leave a vm, and follow up with a brief email. I'd also attach a one pager on your firm's investment criteria if you have one. Learn how to use mail merges to send portfolio updates to your banker / intermediary contacts. Start using Outlook Quick Parts for routine emails / responses. Quick Parts will become your best friend!! It will save tons of time typing out routine responses. I work in a PE biz dev role, so feel free to PM me if you have any questions

 

Just get the pitch down right. I'd suggest making a list, as mentioned above, but starting with the smallest places first. You'll freeze up, botch the pitch, etc during your first 20-50 calls. Don't waste those early calls on places that will show you volume.

Try and set up coffees and drinks with accountants, lawyers, valuation shops, etc. All can give you relevant color on what the market is seeing which will help you when talking to these bankers. You can get referrals as well. Remember, you aren't just going to pitch, hang up and get deals. This is about a conversation, asking them what they are seeing, talking about your firm, etc.

Edit

I suppose you don't need to go full bore like this since this is just an internship. If you made it a FT gig, you'd want to be out and about 4-5 nights a week. I'm in a relationship type role and my day is littered with coffees, breakfasts, lunches, drinks, evening events, etc. Get out there and be active.

 
Best Response

I've never done what you described, but then again in my experience doing what you're describing is fairly rare. Any bank with a decent name, and decent senior bankers, is going to get called on most deals where they could be of use. I mean, if there's a bake-off, can you really say you brought it in? I don't mean to diminish the importance of crafting a good pitch, executing and winning a deal, but success has a thousand fathers and failure is an orphan. 2 of the last 3 deals I've worked on have been won no-pitch, but they happen to be in areas where our firm is dominant. Relationships matter, but I've been told even if I was the MD bringing in these no-pitch deals, I shouldn't be expecting outsized bonuses. Another guy (not MD) recently mentioned in a conversation that he'd like work with X client on a given deal, rather than Y client, because X client would be "his deal", but Y client would just be "firm deal", but then when following up he said it didn't really matter for bonus purposes unless you're in the MD bonus pool.

I'm sure there are plenty of exceptions to this, and I have been assured that if you can truly bring in a deal that "but for" your efforts/relationships would not have come to the firm, you'll get paid. Only thing I can tell you from experience is that what you mention is really hard BUT - it can and does happen.

 

I'm not a banker, but I work in data room sales and occasionally get to meet with VP's- MD's. An MD at a well established MM firm once explained to me his process of sourcing deals, I'm not sure if it will help but since you don't have too much feedback here it's worth a shot.

He mentioned how many banks unless niche focused have trouble differentiating and on any particular deal there are at least 5 banks that could have done a comparable job. He was a big football fan and compared the process to the Ohio State Buckeyes football squad and their sticker system towards merit.

Essentially, once a prospect is identified it's a competition to see which bankers can earn the most "stickers on their helmet". It's often a give, give, give relationship including small favors and networking until finally a client has a substantial enough project. When they are deciding which bank to choose most of the time they look to see who has the "most stickers on their helmet" and they go with them.

I realize it lacks practical advice but the guy is super successful and the mindset might help.

 

I've had the chance to ask this same question to very senior people Head of IBD for a regional office for a mid-tier BB (think BAML/Citi) : 1st deal - very small opportunity through his friendship with an owner in the tech space. he had met the guy at a tennis club. most of his big deals which allowed him to become what he is: he befriended the man who became the ceo of a very large telecom company when he was a VP working on assignments for them, the other guy was a mid-something executive. they were both at the same stage in life and their children were in the same private school Rising star at MS UK : 2Bn deal involving a television channel network - he usually worked for them on very small stuff and by the time they actually had something to do they just asked for the dude directly. MD at HSBC in a regional coverage group: his senior enabled him access to a relationship which translated into a sell-side mandate.

it's really tough. but i am shocked to read that it does not mean you will get an outsized bonus. what about the big names we hear about :o ?

 
dick_fluid:
>

it's really tough. but i am shocked to read that it does not mean you will get an outsized bonus. what about the big names we hear about :o ?

Well, big is relative, right? (Insert penis joke here). Like I said above, at least for my bank, if you're bringing in a deal it won't really effect bonus size, I mean sure you'll be at the top of the range and more importantly first in line to move up, but you're just not going to get 3X what you're expecting.

This is pretty much the case in any business, right? You've got to develop your own specialty to make the big bucks. If you're dominant in med device M&A, because of the work of MDs 20 years before you, you can make MD at that firm and get paid well for continuing to dominate med device M&A. But if you can get a toehold in Pharma, or start bringing in cross-border deals the firm didn't do before, that's when you get to start buying boats that helicopters can land on.

 

I'm still very junior so can't actually give final approval to deals, but did source a one this year that kind of fell into my lap. This one was made from a classic consultant move where we start with a small project that balloons into something way bigger.

I was working as basically the only consultant on a financial management project for a government client. After tying out all of the fixed costs and commitments, I found that the client had a few million dollars that they hadn't allocated to any purpose (this is the government, after all). The money would have to be given back to the parent fund if they didn't use it, so I connected them to a company superior who had a great idea for how to use the money and would raise the profile of the client (and would actually benefit the public).

In total, I found some money for the client to ease his financial woes and raise his profile, brought in a ton of money to the firm, and I got a bigger bonus than my colleagues. It was all pretty much luck, and it made me realize that a sales role is probably not for me. The level of stress I was dealing with trying to navigate the contracting process, iterating scopes of work, management wanting things to move faster (in the government, which is impossible) and knowing that it could all be shut down by a client's changed mind or a bureaucrat refusing to sign off was more stress than I would like to face in on a regular basis.

Nothing short of everything will really do.
 

Not an investment banker, however, as a bank branch investment advisor I sourced a deal to refinance a real estate investors entire portfolio. Had about 10 buildings throughout the city.

 
WallStreetKid:
WSO

Please excuse my friend, he means well, truly.

What he meant to say was WSO---> Eyelikecheese

 

You said "aside from networking", but that's such a huge part of it. One thing you might consider is which companies you do have relationships with, then look at their suppliers, customers, and investors. It helps a ton when you can come in and say "we advise/underwrite/invest in XYZ, your biggest supplier/customer". Other PE sponsors can also obviously introduce you across their portfolio if you're open to syndicate deals.

Another one to consider is industry conferences and in person events such as executive forums. Depending on the size deals you're looking for, meetups for VC-backed startups are a good place to turn up companies looking for new funding rounds. You can get some good in person details that you won't find in a database. Of course, that's more or less defined as networking also...

- Capt K - "Prestige is like a powerful magnet that warps even your beliefs about what you enjoy. If you want to make ambitious people waste their time on errands, bait the hook with prestige." - Paul Graham
 

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