Deal Origination in Investment Banking

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Deal origination is the process of identifying potential investment opportunities for businesses, private equity and venture capital firms, as well as other financial players. It involves either spotting potential investments as they come up and pitching the opportunities to clients or creating deals for them by acting as intermediaries for transactions.

The traditional approach to deal sources is through networking and connections with corporate contacts, with companies seeking to acquire businesses or raise funds relying on these sources to get information on the market. This method is lengthy and requires access to business people who are likely to be part of the company’s networks, as well as a relationship with an investment intermediary.

A larger investment bank could have an in-house deal sourcing team, which is made up of finance professionals who work full-time to generate leads and a potential pipeline of investments for their firm. The success of this method is dependent on the reputation and performance capabilities of these professionals which is why it’s better suitable for established investment firms with a track record of completing successful deals in their portfolios.

It’s important for every investment bank to look for new deals and maintain a healthy M&A pipeline however, it can be difficult to manage without the proper technology and tools. Financial technology companies have developed platforms that allow finance professionals and investors to generate and find deal opportunities with automation. These platforms can filter outbound and inbound leads according to predefined criteria such as industry, transaction value and even location. This will reduce the amount of time spent searching on the internet for opportunities.

Some of these platform suppliers also offer services to smaller organizations that don’t have the resources to set up their own origination teams. CAPTARGET is an example of a service that offers a fee-for service model to assist small brokerages and investment banks find business deals. These services can help you save money and generate more leads by giving you access to a huge database.

Investment banks have other methods to source deals in addition to these solutions that are technological. For instance they can send out a monthly schedule of their sell-side and buy-side mandates to prospective clients. They can also find investment opportunities on the market and then present to clients, thereby earning a commission when the transaction is completed. This is a risky and time-consuming method but it is possible in the event that the investment banker has the right relationships with blue-chip clients. For instance, a big US investment bank recently concluded a USD 2 billion deal with an Indian company after conducting extensive deal sourcing efforts in India. The bank was able secure this deal thanks to its extensive knowledge of Indian economy and its cultural. It also collaborated with an investment banking company in India to ensure it was taken care of. It is this level of expertise and dedication to quality that makes dealing with an investment bank a valuable asset for any company.

About The Author

Safura is a (CRB) “Certified Real Estate Broker Manager” with over 15 years of experience in UAE’s Real Estate Industry. She has built and developed a strong team of professional and successful Industry Experts. Her unrivalled knowledge and experience in Real Estate, Investment and Management moved Aston Pearl from an “idea” to a “well-established worldwide known company”. She continuously inspires the beginners as well as top professionals in competitive market, by proving the key to success is to earn and sustain the TRUST and LOYALTY of all existing and future clients. Safura Abasniya continuously contributes to the Real Estate Industry her expertise by being featured in several magazines with articles encouraging female entrepreneurs, as well as empowering all Real Estate Brokers to achieve highest goals, develop and sharpen their skills.