PE/GE Deal Sourcing?
Could anyone give background or guidance on the best possible way to go about outreach to companies and company executives to source deal flow? I am prepping for an interview screen with a software focused PE/Growth Equity shop where lowest level spends 50% time on deal sourcing and other 50% on diligence and working with portcos, and was warned I should be expected to give a good answer on this. What does typical phone/email correspondence look like? Any help would be greatly appreciated.
It's not as complicated as you think. I doubt the shop has a niche focus within software (e.g., we just do ed-tech or fin-tech) but I'm sure they have industries that are of particular interest. So, look at relevant conferences or industry publications, etc.
Sourcing is just picking up the phone being able to hold an intelligent conversation if you get the CEO on the line or leave a voicemail and follow-up with a thoughtful email on why they should talk to you.
I would add that there’s a balance between knowing about the company’s industry and not spending too much time researching. Consider the following:
Bad Associate 1
Bad Associate 1 calls the CEO of Company A without getting smart on The industry in which Company A operates. Company A’s CEO brings up a basic concept and Bad Associate 1 cannot continue the conversation due to lack of knowledge. Company A’s CEO decides he does not want to work with Bad Associate 1 because he is not thoughtful enough to do basic research.
Bad Associate 1 has locked his firm out of this deal for quite some time.
Bad Associate 2
Bad Associate 2 calls the CEO of Company B after spending weeks studying the niche that Company B operates in and why this makes Company B successful. Company B’s CEO is impressed with Bad Associate 2’s knowledge, but is determined to bootstrap and so does not want to work with Bad Associate 2.
Bad Associate 2 has wasted weeks of research with nothing to show for it.
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