Chris Farmer and I have an article in today’s Institutional Investor, summarizing the key findings from our research on deal sourcing:
Would you invest in a company that only sold to 1 out of 80 leads? Or a company that typically took one year and 3 professionals just to close a single client?
In fact, you’ve already invested in that company: your private equity fund. According to our data, the median investor in private companies reviews over 80 opportunities in order to make 1 investment. The median private equity fund required 3.1 investment team members to close one transaction in one year. By the standards of most traditional sales processes, private equity origination is a very inefficient and labor-intensive process…despite the fact that an effective deal origination process is fundamental to successful investing. This is particularly surprising given that private equity funds who employ a pro-active origination strategy have consistently higher returns, driven by both greater quantity and higher relevance of incoming investment opportunities.
Get the full story.