Our client, a mid-market private equity investor, was concerned about the number of investments it had been making in recent months. Our clients’ own analysis of historical dealflow showed that proprietary deals executed by its competition were few and far between and, crucially, also demonstrated that it was not seeing all of the deals it could; the investment team needed to know why and what it could do to improve the situation.

Knowing that proprietary dealflow was an unreliable source of investment opportunity in our client’s market, we designed a study assessing the effectiveness of our client’s relationships with corporate finance houses in its key markets. In conjunction with our client, we selected 30 advisors whose reputation and transactional history suggested that they could represent significant sources of dealflow for our client, in the future.

In order to fully understand how to improve our client’s market share with these key advisors, it was necessary to map out exactly how these corporate financiers operated and to evaluate why these advisers were not bringing deals to our client more often. In order to encourage these advisors to give full and frank opinions on our client and its peers, interviews were loosely structured, with the interviewers only gently guiding the interviewee from topic to topic.

From our own previous experience and discussions with our client, we established that the most important areas of enquiry were the methodology used by advisors to shortlist GPs and the advisory community’s perception of our client. In order to establish which advisors our client could find most useful as a source of dealflow, we also undertook an analysis of advisor activity and the relationships they already had with key players in our client’s markets.

The study revealed that, on the whole, our client was well regarded and considered to be one of the most professional teams in the market. Nevertheless, we were able to identify specific steps that our client could take to improve its access to deals:

• Importantly, the study revealed that our client was perceived as having an almost exclusive relationship with one particular intermediary. As advisors hold much store in the principle of reciprocity, this was severely limiting our client’s prospects and we recommended that our client was more direct in promoting its relationships with other intermediaries. From our analysis of advisor activity in the market, we were able to identify specific intermediaries that our client should target.
• Although our client was perceived to be very good at soft marketing, such as one-to-one meetings and corporate hospitality, other groups were noted as being more innovative in their marketing activities, and our team was able to advise the client on implementing some of these techniques.
• Additionally, it became clear that advisors in our client’s specific target market were becoming increasingly dissatisfied with the investment community’s ability to stick to due diligence timetables. It was noted that advisors were less likely to bring deals to GPs that had this reputation and that, hence, if our client was able to pay more attention to these deadlines, it could greatly improve its competitive position in the market.