Private Equity Deal Sourcing Process

  • Peter Lynch

Finding an attractive deal in private equity requires a tremendous amount of work. This video highlights the number of opportunities a private equity firm evaluates before closing a single transaction. 

This video pulls from my personal experience, but the numbers are supported by industry data. When I posted this I found that it resonated with most of my friends that work in the industry, but I also received several text messages from friends claiming even larger numbers to find one attractive opportunity. One such text claimed that for the last year a private equity firm had on average “reviewed” 400 opportunities for every transaction closed; a “rough year” as they put it. How “reviewed” is defined changes from firm to firm, but signing a confidentiality agreement (CA) is a pretty easy step to measure. Private equity firms typically keep records of all CAs signed. I think it is common to see 100+ CAs signed for every 1 or 2 transactions closed, which puts the success rate at 2% in the most optimistic scenario. 

As the video will highlight, there are benefits to the information gleaned working through the private equity funnel, and knowing that the work is beneficial to the process makes it easier to look for the needle in the haystack.