More Deal Flow Doesn't Always Mean Better Deal Flow
One thing we've been thinking about lately is whether having more deals to look at actually makes a search better.
It’s easy to feel productive when the pipeline is full. More listings, more CIMs, more conversations, more opportunities to evaluate.
But the reality is that a lot of time can disappear into businesses that were never a particularly good fit in the first place.
The more interesting challenge is figuring out how to get better at filtering early, understanding the business model, the quality of the earnings, the seller situation, and the real reason the business is attractive before spending too much time on diligence.
A smaller pipeline of businesses that fit the thesis can be much more useful than a huge pipeline of businesses that simply meet the headline criteria.
One should have an early, strong screening framework, which would just eradicate a no. of companies and at the same time bring in quality companies.
Curious how others think about this, do you focus more on maximizing the number of opportunities you see, or getting much more selective earlier in the process?