Apr 23, 2024 11:54:35 AM | For Investment Banks & Advisors Try these new ways to identify and connect with private equity firms

Private equity firms aren't just looking for any investment opportunity—they're searching for the right one. If you’re an investment banker, that means going the extra mile to make sure that your clients get seen. 

As a buy-side firm that helps connect investment bankers and intermediaries to a network of private equity firms, we’ve learned a lot about how to stand out in the lower middle market. 

Here are six new ideas for investment bankers, intermediaries, and business owners to better identify and connect with private equity investors. 

Look beyond the investment thesis 

An investment thesis is a foundational indicator of a private equity firm’s interest, but it isn't etched in stone. Learning more than what is simply listed on a website can be a huge advantage to vetting a buyer list before your outreach begins. Just because an investor shares characteristics that match your mandate, it doesn't mean your deal is a current focus. Perhaps the firm is developing a new thesis or areas of focus for deal flow going forward, or maybe it's already acquired a platform that could fit your client as an add-on. This also means some buyers may not immediately stand out, but could offer a potential fit. And at the end of the day, strong relationships will give you a more clear view.

Follow actions, not words

Another way to accurately gauge an investor’s interests is to watch where they’re factually putting their dollars to work. An M&A database is a must when it comes to ensuring you have up-to-date acquisition history and accurate contact info when it’s time to reach out. With the right platform, you can filter by sector, recent investments, deal size, and even geography. TruSight uses Private Equity Info data on every deal. The platform allows you to easily find firms that may view your client as standalone or add-on investment, and it quickly identifies the exact executive to contact for your deal. 

Evolve your event strategy and take advantage of LinkedIn

In-person events are a great channel for discovering new firms and touching base with long-time connections. We wrote about ways to better prepare for events last year. But how do you find new connections in the off-season? Last November, LinkedIn officially surpassed the billion user mark, with over 67 million company profiles, making it a great place to connect with investors and portfolio companies. The social network has hundreds of M&A groups that are collections of contacts interested in specific industries and deal sizes. Engaging with and posting content in these groups can quickly establish your credibility and help you discover new connections. 

Keep relationships warm by sharing knowledge

Closing a deal shouldn't be the end of your relationship with a firm. Instead, position yourself as a trusted advisor and a valuable resource. TruSight shares industry articles and commentary with our network to help keep relationships warm when we don’t otherwise have deal flow to discuss. Participating in industry-focused events, and informal activities like golf, happy hours, breakfast briefings and others, are all ways to stay top of mind with the private equity community.  

Engage a buy-side partner 

If you are unable to connect with a given buyer on your list, consider a partner that can leverage warm introductions to firms that you may not know. TruSight has spent a decade building relationships in the lower middle market, establishing buy-side agreements with private equity firms, family offices, and strategic acquirers that are actively seeking new investment opportunities. For our investment banker and advisor partners on the sell-side, that means we can expand the distribution of your deals and deliver high-quality introductions to investors, and at no cost: you keep 100% of your deal fee. 

Improve your teasers by being more transparent 

The basic goal of a teaser is well understood: your job is to pique a firm’s interest and prompt them to request more detail. But being upfront may help you build trust and weed out firms that don’t align. Consider listing potential stumbling blocks with the client such as customer concentration, unique business status, or other wrinkles that may quickly nullify a buyer’s interest. While there is always an element of salesmanship in marketing a deal, the honest approach often works well to save time by whittling down a list to the most promising set of buyers. 

Dan Mahoney

Written By: Dan Mahoney

Dan is the co-founder and managing director of TruSight, leading a team that delivers outsourced business development and deal origination services.