How to Win: The Five S’s of Deal Sourcing Robert J. Fitzsimmons Managing Partner, High Road Capital Partners The Capital Roundtable Dealsourcing Conference May 26, 2011

2. How to Win:
The Five S’s of Deal Sourcing
Robert J. Fitzsimmons
Managing Partner, High Road Capital Partners
The Capital Roundtable
May 26, 2011

3. Why is Deal Sourcing Important
• Large inefficient market (11,000 deals in
Large, (11 000
2010)
• Quality versus quantity versus probability
• One deal a year can be the difference between
top quartile and back of the pack
il db k f h k
• Back end is useless without the front end
• Investment strategy drives sourcing strategy

4. The Five S s of Deal Sourcing
S’s
• Sources
• Strategies
• Signature
Si
• Spreading the word
• Statistics

5. Sources
• Companies
• Owners
• Intermediaries
di i
• Advisors
• Deal aggregation websites
• Fundless sponsors
• Friends & family

6. Companies
Revenues Total Number S Corp C Corp
$10 – 50 mm 126,228 73,682 52,546
$50 – 100 mm 16,517
,
$100 – 250 mm 9,695
$250 + mm 7,485
50 mm + 33,697 14,192 19,505
Source: IRS data, 2008

7. Companies/Owners
– How many are relevant based on industry, size,
profitability
– Considerations
• Reaching the right person
• Getting their attention
• Getting to yes
• Getting to a closing

8. Intermediaries
• Intermediaries
– Sell-side investment bank
– Sell side broker
Sell-side
– Buyside investment bank
– B id b k
Buyside broker

9. Non traditional
Non-traditional sources
• Professionals (1.1 million attorneys, 500,000
(1 1 attorneys 500 000
CPA’s, 650,000 financial planners/stock
brokers)
• Deal aggregation websites/services (a handful,
but growing)
• Fundless sponsors (est. 100 – 200)
• Friends and family (unlimited)

10. Strategies
• Direct vs. indirect
vs
• Inverse relationship between size and
representation
• Investment strategy drives sourcing strategy

11. Investment Strategies
• Value buyer
• Buy and build
• Cost
C cutting/efficiency generator
i / ffi i
• Capital markets arbitrage
• Family business transition
• Turnaround

12. Sourcing Strategies
• Direct • Indirect
– Companies – Intermediaries
– Owners – Advisors
– Fundless sponsors – Deal aggregation sites
– Friends & family

13. Strategies
• Reputation x share of mind = deal flow
• Build reputation (signature)
– Ni h expertise
Niche ti
– Get things done
– Easy/honorable to deal with
• Grow mind share (spread the word)

14. Signature
• Varies by market but you must be consistent
market,
• What do different audiences want?
– Companies: highest price take care of employees
price,
– Owners: highest price, take care of company, help me
achieve engagement/disengagement objective
– Intermediaries: certainty of close, speed to close, no
retrading, easy to deal with
– Advisors: fit with client, easy to deal with, recognition
– Fundless sponsor: certainty to close, no retrading

15. Spreading the word
• Email
• Phone
• ACG/Capital
ACG/C i l Roundtable/industry events
d bl /i d
• Meetings
• Press (press releases, interviews)
• Social media

16. The Deal Flow Cycle
Inbound
Deal flow Emails
Filter Press releases
Completed deals Networking
Calling programs
C lli
Outbound

17. Statistics
• Deal flow funnel/waterfall
– Top down, bottom up
• Industry stats
– Comparison of self to market

18. Keys to Success
• Consistent focused deal sourcing effort
Consistent,
(strategies, sources)
• The right message to the right audience
(signature, spreading the word)
• F db k l
Feedback loop, adjust efforts as needed
dj ff d d
(statistics)