New Market Data Shows Private Equity Firms with Dedicated Business Development Professionals Outperform on Market Coverage

With average coverage of 19%, Sutton Place Strategies sees great opportunity for effective deal origination to unlock incredible value for investors

NEW YORK--()--Sutton Place Strategies, LLC, whose Deal Origination Analytics™ is dedicated to helping private equity and mezzanine investors maximize their market coverage of relevant deal flow, today released proprietary data that shows that the best PE firms at deal sourcing have dedicated BD professionals.

According to the firm’s 2014 Deal Origination Benchmark Report (DOBR) statistics, while only 41% of the firms involved in the analysis had a dedicated BD professional or team, each of the top performers in the firm’s 5 peer groups had a dedicated BD professional driving deal sourcing (top market coverage in bold in the table below).

PE Deal Origination Market Coverage Statistics

       

Average

     

Max

     

Min

   

Top Quartile

Market Coverage¹

     

19.3%

     

52.2%

      2.8%    

39.9%

Market Coverage Boutique Intermediaries 12.8%

45.8%

1.4%

34.7%

Market Coverage Most Active Intermediaries 21.8%

61.4%

1.0% 46.3%
Generalist PE Firms Market Coverage 17.6%

35.3%

7.4% 28.3%
Quasi-Generalist PE Firms Market Coverage 17.9%

40.5%

3.1% 31.2%

Sector Focused PE Firms Market Coverage

23.7%

48.2%

6.2% 37.7%
Upper Middle Market PE Firms Market Coverage 38.7%

52.2%

27.6% 46.1%
Lower Middle Market PE Firms Market Coverage       8.7%      

27.9%

      2.8%     21.6%
¹Percentage of completed PE transactions with a sell-side advisor in relevant size ranges and sectors reviewed by a PE firm.
 

Better deal sourcing positively impacts returns by allowing private equity investors to access relevant opportunities to choose investments that their competitors miss, often through quieter, more limited processes resulting in lower purchase multiples.

So what are the most successful firms doing to differentiate themselves? Two SPS clients, both employing business development specialists, have consistently increased their market coverage over a long period of time.

Kohlberg & Company, a leading middle market private equity firm founded in 1987, has seen the middle market develop and understands the need to stay one step ahead of the competition. “Seeing the market is an important first step in any business development function,” says Andrew Bonanno, Managing Director at Kohlberg. “Prior to SPS’ service offering, we didn’t have an empirically based way to assess our performance. SPS not only provides useful benchmarking, but more importantly highlights areas for continuous improvement.”

Sector-focused fund American Industrial Partners, with one of the most impressive fund performance track records in the industry, hired a dedicated senior BD professional in 2011. “We are a firm of engineers and operators who are dedicated to continual process improvement for both our holdings and our investment partnership,” says Partner, Business Development Ben DeRosa. “SPS delivers the data and metrics to optimize our messaging to existing relationships and prioritize efforts to reach active intermediaries who are less familiar with our model.”

While more companies are recognizing the value in improving deal sourcing by adding dedicated business development professionals, Nadim Malik, founder and CEO of Sutton Place Strategies, comments, “the majority of firms do not have dedicated business development professionals, but they can still create great opportunities for effective deal origination by putting in place a focused, disciplined plan to broaden market coverage across the full range of intermediaries – large and small – in the middle market.”

About Sutton Place Strategies, LLC

Founded in 2009, Sutton Place Strategies has established itself as the thought leader in deal sourcing intelligence in North America. The firm's Deal Origination Analytics™ service consists of a customized report package designed to quantify the addressable universe of a client's transaction target market, measure market penetration, and serve as a road map to increase the effectiveness of a firm's internal business development efforts. The reports are backed by proprietary data tracked on a primary basis by Sutton Place Strategies since May 2009.

All reports, tables, charts, statistics, etc. in this release or downloadable from the company’s Website remain the intellectual property of Sutton Place Strategies. Sutton Place Strategies grants all users a limited, personal, non-exclusive, non-transferable, revocable license to access, display, and use such reports and downloadable content for non-commercial purposes only. Any republication of Sutton Place Strategies reports or downloadable content must include proper citation to Sutton Place Strategies or be explicitly approved in writing by Sutton Place Strategies authorized personnel prior to republication. All rights not specifically granted herein shall be reserved to Sutton Place Strategies.

Contacts

Media:
For Sutton Place Strategies, LLC
Rosalia Scampoli, 212-537-5177, Ext 7
rscampoli@marketcompr.com

Release Summary

Sutton Place Strategies releases proprietary data that shows that the best private equity firms at deal sourcing have dedicated business development professionals.

Contacts

Media:
For Sutton Place Strategies, LLC
Rosalia Scampoli, 212-537-5177, Ext 7
rscampoli@marketcompr.com