Missing out on deals is an occupational hazard for M&A professionals, but technology can improve your coverage.
FOMO (or fear of missing out) is an occupational hazard for M&A professionals. A recent study by SPS found that most private equity firms only see 15% to 30% of relevant deals, and this drops to a coverage rate of just 9% for deals in the $10m to $250m range.
But the study also reinforces the correlation between performance and coverage. The more relevant deals you see, the better your returns are likely to be. Unfortunately, most firms think they see more of the flow than they do. In reality, even the top quartile of firms only see a tiny fraction of relevant deals.
Seeing more flow
The most common approach to avoiding M&A FOMO is still focused on building relationships and networks. Knowing the right bankers, advisers, owners and management teams is widely held as the key to success.
Even before the pandemic, exclusively relying on this approach was often no longer sufficient. Efficiency wasn't optimal and results were not always satisfactory.Bain’s Private Equity reportreveals that when funds look back and review the number of relevant deals they actually saw from within their own networks, the results are surprising.
The reality is that the middle market is just too big to know everyone. There were 19,451 mid-market deals involving European targets last year, according to Refinitiv.
Dealsuite is an online deal sourcing platform that matches buyers and sellers. Based on its smart matching algorithm, the platform gives an overview of relevant deals in the market and delivers daily deal updates to your inbox so you will not miss out on relevant deals.
Cutting out the noise
Whatever opportunities you’re focused on, Dealsuite lets you set filters to cut out noise and make sure that you only see deals that are relevant to your target criteria. Filters include revenue, EBITDA, geography, client types, FTE, CAGR, business models, stage of the company, type of transaction, stake offered, price, deal size, industry classification and more.
The ability to refine your focus has gotten more important than ever. In 2021, mid-market M&A deal value reached the highest level since records began and the number of deals increased by 36%, totalling $294bn in value.
Given the size of the market and the high levels of activity, communicating the precise focus to everyone is challenging.
With Dealsuite, M&A professionals can stay up to date and take control of the deals they see, so missing out on relevant deals will be a thing of the past.