"Sourcing Model"

There's no real way to distinguish which firms use a sourcing model. Sometimes on the responsibilities and job description portions of a recruiter's email it may say something to the effect of sourcing, but oftentimes they leave it out because they know they'll get less applicants.

It's not a function of firm size, either. TA, which is an 8 billion dollar fund, employs it, Summit, which is about a billion, has it as well. Thoma Bravo has a sourcing model, and they between 1 and 2 billion.

What is Cressey doing these days?

Cressey broke off to form Cressey & Co. All three namesakes claim the break up was mutual, but who really knows. I think TB is going to focus on business services, and Cressey is going to focus on healthcare services.

I only know this random trivia because I had an interview lined up with TCB last year and pulled out due to the combo of the sourcing model and the turmoil.

Just curious, but what attracts you to MM PE (vs bigger PE firms)? And I haven't seen these threads that warn of "sourcing" model - what exactly are the risks with this?

I think there are a lot more smaller PE shops in the Middle Market. I prefer to work for small companies as opposed to large firms.

Additionally, I work for a MM IB and find the deals to be a lot more interesting. In my opinion, it is less politics and more finance skills/business acumen oriented. Not to mention, the large cap deal machine has slowed considerably, whereas the middle market is still doing pretty well. My firm is still on track to have a pretty good year.

Don't get me wrong, BB's are a great place to work and so are the large PE shops. I interned at a BB, had a pretty good time but just felt that the large firm lifestyle was not for me.

"Sourcing Models" are not necessarily a bad thing. Some people prefer getting on the phones and sourcing deals, whereas I would prefer not to, but it may be unavoidable at smaller firms. The risk, I believe, is that you would just be on the phones all the time and not actually do any finance related work. Hope this answers your question.

That about sums it up. I suppose you commit yourself to never owning a G5, but first-class can generally suffice...or so I think.

CPHBRAVO,

You're a clown...
Very insightful comment. Thank you for your valuable contribution.

I've never understood the concept of a sourcing model. I have worked at a small PE shop that only does a few $B+ deals a year for the past 3 years and I have never had to cold call or source a deal. Our bankers and family contacts are constantly calling us with CAs and OMs for review.

Does sourcing consist of calling bankers, other buyside guys, and/or company management?

Sourcing usually consists of contacting company management or bus dev departments of companies. My friends that are at shops with sourcing models have to generate a certain number of leads per quarter/month and their bonus compensation depends highly on it. In addition 1 or 2 of your cold calls are expected to turn into potential deals. The only deal experience one would get in that situation is if they source the deal, as well (or if all the other associates and analysts are too busy to work on it). From what I hear, it's pretty terrible unless you're incredibly self motivated. Otherwise it's easy to slack off and get stuck with a number of calls to make towards the end of the month or quarter.

I never had to source deals, but I worked for an investment RE firm (commercial only) and their "brokers" had to source their deals. Literally, they just called people all day. They would find an area where a property just got purchased and then call all the surrounding owners and be like, "such-and-such property sold for $5MM, did you know that your property could be worth that much?" Then they would find out if they were interested in selling, run a comp for the property and market it. It was shitty to sit and watch them do this all day, but in all honesty, 10 years from now they will all be severely wealthy. Part of RE is building a book of clients and they just buy and sell, or "trade" one property for another continuously. Just wasn't my cup of tea.

At the PE firm I am interning at, they actually have 1 MD that does sourcing almost exclusively. He has built himself a massive network of business brokers, CPAs, attorneys and executive managers from various industries so nearly all of the deals come to him. I'm not sure how many firms use business brokers but its probably a good option for smaller funds, although I suppose that a business broker is exactly what a sourcing analyst would be, except the analyst would be a lot cheaper, lol.