Deal Sourcing: Best Methods?

All:

Deal sourcing is not a component of my current position, but the first month of the year has proved to be slow and as a result we're looking to uncover companies that fit our typical investment criteria without the aid of banks or other traditional deal sources.

Has anyone found any databases or other platforms that were particularly helpful in filtering companies? I'm not focused so much on the financial profile, as I'm aware that small, private companies are typically have little-to-no information in that realm.

More importantly, I'm looking for companies that are within our investment space, given a fairly specific geographic location. Any thoughts?

I don't mean to give away the "secret sauce" of anyone who frequently goes through this exercise, so if a private message is more appropriate, please do so. Any guidance at all would be appreciated as Cap IQ is probably my best option right now.

3 Comments
 

Whatre your investment criteria? And are you w/ a sell side broker, ib or pe firm?

“...all truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident.” - Schopenhauer
 
Best Response

There's no secret sauce but picking up the phone and calling people is the only thing that works consistently.

Your question is terribly general but here are three scenarios (assuming you're in a sub $500MM fund): (1) if you want healthy small companies, find out the small funds that do $50MM deals in your area (CapIQ is a good resource here) and find out if they're ready to exit any portfolio company; (2) if you're looking for distressed opps, your local turnaround shops and small-ticket ABL banks will always have names that are good recap opportunities/equity plays; (3) if you want healthy larger companies, CIQ has financials for companies with public debt and don't forget any company that ever filed an S-1 in anticipation of an IPO that got pulled.

If your fund only does pristine companies in a tiny sliver of the country or a niche sector, you're going to have to go to whatever conferences that industry has and shake a lot of hands.

 

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