A Deal Origination investment banking is the primary source of revenue for most investment firms. The success of any firm depends on its ability keep a steady flow of lucrative investment opportunities.
Decades ago, a firm’s investment and acquisition process began with members developing relationships with the people and businesses in their local markets, by leveraging personal connections, Rolodexes at golf tournaments and lunch meetings, or simply attending industry conferences to find business owners who could be interested in selling. A company’s M&A process today begins much earlier and has a global focus. This is due to the advances in technology and data analysis, as well as a specially-designed digital tools.
The primary job of M&A executives and their teams is to identify businesses that might be attractive to buyers and offer them to business owners. If the owner decides to take up the offer and then the investment banker is given the authority to provide advice on the deal, and earn commissions if they’re successful in closing it.
Investment banks can manage a deal sourcing operation internally or outsource this task to intermediaries who specialize in a specific market or industry. They search for opportunities, start first communications with business owners, and facilitate the transaction process by handling paperwork and providing market information. Investment banks are not able to browse and filter through the many opportunities available and are forced to rely on intermediaries, who might not have up-to date information on business operations.
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