Private equity firms, especially those looking for targets in the lower middle market, are employing new techniques and methods in deal origination. With an influx of startups and family-owned businesses expected to hit the auction block, PE firms are hiring professionals that are dedicated solely to deal sourcing.
Some of the PE firms embracing the approach include: Audax Group, Bertram Capital Management, High Road Capital and Huron Capital Partners.
Originally, partners who were executing deals were also sourcing them and conducting business development, explains Rich Prestegaard of High Road Capital Partners. “That model works, but you’ll have times when deal flow stops, because people are focused on executing the actual deals.”
To keep pace with the plethora of targets available, more PE firms will implement dedicated deal sourcing. The origination professionals promise “to pull those deals in and get your firm known,” explains Prestegaard.
See the next trend in our special report: PE Fundraising May Have Peaked
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Corrected December 17, 2014 at 11:59AM: 3849787444001