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Best Practices for Proprietary Deal Origination


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These slides are from a webinar hosted by Navatar and featuring Exit Strategies. Watch full webinar here:

Watch this recorded webinar by Exit Strategies, a buy side deal origination firm, as they discuss the psychology of approaching business owners, and the tactics to establishing a successful relationship.

Topics include:
- First impressions – do not approach a business owner like you would an intermediary!
- Timing – the optimal window of engagement
- Process – how to build an effective origination strategy
- Discipline – bring the same rigor and structure to origination as due diligence
- Pipeline - how a broad bandwidth of deal pipelining improves opportunity quality

Published in: Economy & Finance
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Best Practices for Proprietary Deal Origination

  1. 1. Webinar: Don’t Lose The Deal – Proprietary Psychology is Different
  2. 2. Exit Strategies is a buy side deal origination firm that: • Focuses on the middle market • Represents a diverse spectrum of investors & capitalization methods • Employs proprietary tools and process to create profitable deals not just introductions • Focus’ on the distinct psychological nuances of originating proprietary deal About Exit Strategies
  3. 3. Today’s Presenters Jordan Wagner JordanistheCo-Founder ofExit Strategies andthemanagerof deal development. Jordanfocuses ontheidentifying targetsand matching with theright private equityclient. Allan Siegert Allan serves asVPSales for Navatar. He isaveteran in Financial Services saleswith morethantwo decadesof experience inSaaS, financial marketdata,tradingroom systems, CRM andfinancial news. EdHarms EdHarms is thedirector ofsales at Exit Strategies.Ed was the founderandowner of Selling Excellence, anational saleand marketing consultancy. Edhas conductedseminars nationwide andmadepresentations toover 50,000people duringhis career. Mark Wagner MarkisthePresident &CEO ofExit Strategies. Markspentthelast twenty five years asmanaging partneratoneofLong Islandsfastestgrowing midmarket accountingfirms.He currently owns Paypro, oneofthenations largestindependent, privately heldpayroll providers. Mark has participated inover ahundred mergers/acquisitions and turnarounds.
  4. 4. Proprietary Deal Advantages: • Collaborative engagement with ownership • Minimal competition • Greater access to unique, meaningful insights • Value on terms/buy • No auction with associated upward price pressure
  5. 5. Proprietary Deal Challenges: • Extensive education of principals often required • Deal packaging usually primitive • Identifying and waiting for optimal window of engagement • Sellers can be easily overwhelmed/not prepared for data request • Usually a marathon not a sprint
  6. 6. Optimal Proprietary Deal Flow Demands • Process orientation • Timing Sophistication • Discipline (bias for exclusion) • A Unique Psychological Approach
  7. 7. Process Orientation Bringing the same rigor & structure to origination that Private Equities bring to due diligence.
  8. 8. Timing Sophistication Opportunity pipelining Developing an opportunity until it’s deal ready. – The optimal window of engagement – Deal flow predictability – Compressed cycle from full engagement to resolution
  9. 9. Discipline A bias against immature opportunities , forced fits, weak positions….
  10. 10. A Unique Psychological Approach • Building a deal vs. Bidding on one • Not an interrogation! /”You called me!” • Understanding ownership ’s position & desires • Educate then create momentum
  11. 11. Supporting Process, Timing, Discipline & Psychology : • Classification systems • Opportunity management protocols by class • Customized rules of engagement • Rigorous internal investment review • Pre engagement briefing of the PE
  12. 12. Challenges of Developing a Deal Origination Engine • Engine must be managed like a business in itself • Highly collaborative relationship with origination enterprise (in house or outsourced) • Create and produce a proprietary opportunity language • Detailed definition of investment targets – Focused target easier to see and hit
  13. 13. Focusing on a Space Improves Deal Quality Over Time • Focusing OnASpace Improves Deal Quality Over Time • Creates predictable deal flow • Unique presence in sector for PE, creates relationships with many owners • Provides important competitive intelligence • Increased credibility in the add on search space • Allows business owners to WANT to do a deal with you, rather than bidding war • Understand your competition (strategic buyers, etc)
  14. 14. Design Considerations for Your Origination Search • Create a large enough target list (200 companies) • Create a strong narrative and reason why you are in this space • Create a presence in industry (trade shows, industry associations etc) • Have the man power • Give as much as you take • Stay organized and track results • Know how to identify strong and weak industries and when to end searches
  15. 15. The Role of Metrics in a Search: An Example • 1000 companies contacted • 50% are not interested • 10% have institutional investors • 25% do not respond • 10% have interest on some level • 5% have some level immediate interest (50 companies) • Of these 50 companies, most will be too small. • Usually 5-10 platform opportunities.
  16. 16. Why Outsourcing Makes Sense • Puts full time focus on origination • Allows PE to focus on actionable deals • Receives in the trenches feedback • Insures continuity of origination • Cost savings
  17. 17. Questions? To learn more about Navatar’s deal management solutions, please contactAllan Siegert. Email: Phone: 212-863-9655 ext. 7473 To learn more about Exit Strategies, please contact Jordan Wagner. Email: Phone: (702) 538-7088
  18. 18. Thank You