What are the most common ways to generate deal flow?
May 13, 2024
by a searcher from University of North Texas in Dallas, TX, USA
Hey everyone,
Im Curious what the most common ways people use to generate deal flow. Im looking for more detailed answers from whoever is willing to share.
Which one of these do you use the most to create consistent deal flow:
1) Cold Calls (if so how many calls did it take you to do a deal)
2) Cold Emails
3) Linkedin
4) Networking (explain in more detail how you network exactly)
I would appreciate if you are able to share in more details the numbers to give a perspective on how much volume you have to push in order to find a deal that actually closes. I know every industry is a little different. Most common answer I see is cold calls, but as far as how many dials you have to do that answer seems to differ a lot between people.
from Wesleyan University in Granville, OH, USA
The contact method is really secondary (which is why I use all). Do your homework before you reach out, know exactly what you want to say about why you're interested in their company. It's time consuming, something like 5/day is what I can do when I add up all parts of the process. For an outreach cadence read up on outbound sales processes. This is exactly the same thing just with a different message.
There are two components that largely determine response rate and that is your messaging effectiveness x industry proclivity to sell. The key to the messaging is in succinctly giving the owner a clear, genuine reason why they should hear you out. This has to be highly personalized. I've tried to semi-automate or do it with an offshore support team and I haven't been successful with either. My response rate has been as high as 25% over 100 targets, other times it's 2%. Since I think my messaging process doesn't vary that much, it indicates the 'proclivity to sell' factor can vary by ~10x. In some sectors everyone is a seller, and in others no one is. It varies over time for a given sector.
And yes, network. Every time you go to happy hour or an ACG meeting be ready to quickly describe what you're looking for. Let people around you know.
from Columbia University in New York, NY, USA
Developing a perspective on proprietary sourcing is a very good idea. Not only does this allow you to learn more about what's out there, it gives you more at bats with direct owner engagement.
Here are some examples of smart (targeted) proprietary sourcing strategies I have seen:
1) Targeting a specific geographic area.
Advantage to this approach is the ability to go DEEP on local connections, trade publications, local events, and meeting business service professionals. This is really a classic ground game strategy.
2) Targeting businesses of a certain owner profile.
A classic technique here is veteran owned businesses. Many of these businesses benefit from preferred contracting opportunities, and would therefore look to sell to other veterans in order to maintain sales and operations. This requires you to be a certain type of person, but there are plenty of other buyer types (physicians, educators, licensed professionals, etc.),
3) Targeting a list building advantage.
Maybe you have access to local membership lists of different trade associations (random idea, not specific to your case). Sometimes this advantage comes from special access./ knowledge. Sometimes it just comes from the willingness and system to do the work (building scrapers, offshore data collection, etc.). Whatever your list building advantage, you can use it to speed up and differentiate your outreach. Key here is to go to something that other people are not using.
Just a few ideas. The best thing to do is find a differentiated corner and really get to know it.