Having fast and accurate access to data to find potential acquisition targets is crucial for investment banking and private equity success. Deal Sourcing Platforms (DSPs) are designed to make the process of discovering potential acquisitions as efficient as possible. In this article we explore key features of the platforms, list eight sourcing platforms to support M&A professionals' work, and provide valuable insights before investing in a deal sourcing tool.
Various company and financial information platforms have simplified and streamlined the process of identifying potential acquisition targets. DSPs allow investment banks and PE firms to search attractive investment opportunities more efficiently.
What is a Deal Sourcing Platform?
Deal sourcing platform (DSP) is a software designed to support private equity firms and investment banks in identifying viable investment prospects. Deal sourcing software accelerates the process of seeking out and evaluating prospective targets that align with the investor's criteria.
Platforms provide different scope of company information, market and industry trends and additional analysis tools. Some platforms are broad with global market news and up-to-date research. Others have better features in transaction data, some more company ownership information.
The more advanced platforms take advantage of Artificial Intelligence, giving M&A professionals an additional boost in deal sourcing activities. In addition to searching for acquisition targets, some platforms also provide software for due diligence and post-acquisition integration, which can help make the process of evaluating a potential deal and integrating it into an existing business smoother.
How Private Equity firms and Investment Banks use Deal Sourcing Platforms for finding acquisition targets?
Private Equity firms and investment banks use the precise search filters embedded in the platforms to narrow down potential targets based on their acquisition criteria. The platforms allow investors to search through a database of companies and to quickly identify targets that may be promising. The saved time from manual desktop research will leave more time for financial analysis, due diligence, meetings, and legal assessment. As a result, the firms can gain access to new opportunities that are more likely to yield successful investments.
Deal origination platforms help streamline the search for potential targets that align with PE firms' investment strategies. For example, a PE firm can use deal sourcing software to identify potential companies that are undervalued or underperforming. AI based deal sourcing platforms (such as Inven) are also able to detect relevant targets based on similar companies PEs have invested in before.
Investment banks, on the other hand, can leverage deal sourcing software to identify companies seeking to raise capital or be acquired. The platforms allow IBs to connect with potential clients and facilitate deals more efficiently for their clients. AI solutions reduce manual desktop hours and allow IBs to find better leads in any niche.
What is more, Both PE firms and IBs also benefit from deal sourcing software by tracking industry trends and networking with other professionals in their field. DSPs enable keeping up to date on market changes and new companies. The platforms also support connecting within the finance industry, allowing M&A professionals to find the contact information of potential partners and clients.
Top platforms to support deal sourcing
Here are seven platforms that investment banks are leveraging to reach a broader range of companies within the target industry, or to find companies seeking buyers previously left hidden.
CapitalQ: Market and industry reports by analysts
CapitalIQ, subsidiary of S&P’s, is a comprehensive financial intelligence platform that offers a wide range of reports, analysis tools, and market research. CapitalIQ has a focus on analysis and research by its own analysts. These include industry reports, market trends, competitive landscapes, and key performance indicators.
Features: CapitalIQ has a particularly good coverage on public company information. CapitalIQ provides data on IPOs, equity and debt offerings, and M&As. CapitalIQ is utilizing other than AI in its search features.
Pricing: Team-based pricing typically starts around $25,000 per team, but this can vary widely depending on the number of users and the specific services included in the package.
Orbis: Global leader in company database
Orbis, also known as Bureau van Dijk, is the global leader on company information. It is a subsidiary of Moody’s Investors Service, and offers a company database on all legal entities in the world. Orbis provides tools and data to facilitate M&A activities, including company information and ownership details, market insights and transfer pricing analysis.
Features: Company data covers industry classifications, ownership details, financial information, and key executives, among others. The search feature is other than AI based. Other key services include supplier and vendor assessment, cybersecurity analytics, business development, risk identification and compliance.
Pricing: The basic price starts from $240 as a one-time payment. Multiple subscription editions available. The pricing typically ranges from $6,380 to $320 000 per year, depending on the services and features included.
Inven: Smart deal sourcing software for faster dealflow
Inven is a deal sourcing software designed to save M&A professionals’ time. Inven provides an advanced AI screener that combines millions of data points to build an exportable list of prospective targets for further analysis. Inven has a vast database of of 23 M+ companies world wide, financial data of 50M+ legal entities in Europe, with the access to 430M+ professionals and owner contacts.
Features: The AI for deal sourcing finds all relevant companies that match written instructions, reducing the need to search with industry codes. The platform can be used in finding relevant deal prospects, add-on targets, or platform companies with an access to accurate owner contacts and an intuitive export feature.
Inven's software leverages data from various sources, enabling targeted searches based on previous relevant results determined by the analyst. This functionality enables search based on family-owned and middle-sized companies in healthcare, for example. Further, this allows analysts to spend more time on other crucial tasks such as due diligence, valuation, and stakeholder meetings.
Pricing: Customizable pricing system tailored to meet the clients’ specific needs. The requirements and a personalized pricing plan can be discussed in a demo, where a client gets to know the distinct features and user experience. Pricing for one user starts from $10,000 per year. For larger teams, the pricing depends on the amount of users.
FactSet: Excel-optimized datasets from publicly traded companies
FactSet has a digital platform that combines financial data, analytics, and tools, especially from public and traded companies. FactSet aggregates and normalizes financial data from various sources, including market exchanges, regulatory filings, and other third-party databases.
Features: FactSet's offerings support workflows in investment research and industry analysis, portfolio management and trading, as well as wealth management. FactSet offers a range of data sets, including real-time and historical market data, company fundamentals, industry-specific data, economic indicators, and more. They have an emphasis on Excel plug-ins with automatically updating information.
Pricing: The subscription typically starts $12,000 per year. Offers a free trial.
PitchBook: Transaction and valuation data for M&A professionals
PitchBook is a financial data and technology provider that covers companies in the public and private markets. PitchBook is a subsidiary of Morningstar and it consolidates, standardizes and derives insights from data from various sources around the world. On top of that, PitchBook offers products that support the utilization of their data and insights.
Features: PitchBook specializes in private equity-focused intelligence, with financial data of about three million companies. They provide information on things such as private market activity, including transaction and valuation data, investors and owners.
Pricing: PitchBook's pricing system varies depending on the number of user seats and the specific requirements of the client. The standard plan for PitchBook typically starts at around $25,000 per year for up to three users. Additional users beyond the first three can be added at a cost of $7,000 per user per year.
Grata: Deal origination platform
Grata is a software company that relies on ML/AI technology as its foundation. Its operational approach centers around utilizing company websites as the primary and authoritative data source. The validation of this data is achieved through an entirely automated machine learning system.
Features: The database consists of lower middle-market and middle-market companies internationally (US, Canada, Europe, Oceania). Grata's workflow tools help relationship management as well as build business development strategy.
Pricing: A tiered pricing system with different plans. Pricing details are customized based on the scale of use required by the client. Typically starting from $20,000 per year.
LinkedIn Sales Navigator: Finding and managing personalized lead recommendations
LinkedIn Sales Navigator is a specialized tool offered by LinkedIn, designed to assist sales professionals in building relationships. Although LinkedIn Sales Navigator is not designed to search acquisition targets, it is often used to find and connect with potential sales leads.
Features: Sales Navigator provides personalized lead recommendations based on various factors such as job title, industry, and connections. Search filters allow narrowing down the search based on criteria, such as location, company size, seniority level, and more. The Navigator also offers integration with CRM systems for managing leads and accounts.
Pricing: Typically starts from $89 per month, $1,000 per year.
Key features to look for in a Deal Sourcing Platform
There are a few features that separate the good and average deal sourcing software. When selecting a service provider, key factors to consider include:
- Number of companies: Consider the number of companies listed on the platform and their global presence to ensure a diverse array of investment opportunities.
- Market diversity: Geographical coverage varies across platforms. Ensure the software caters from public to middle market and lower middle market companies, aligning with your investment scope.
- Scope, depth and accuracy of the data: Look for a M&A deal sourcing platform offering a wide array of data points, from financials to ownership and contact information. Good platforms match comprehensive company profiles with similar companies to map out their competitors and detect equally promising acquisition opportunities.
- Intuitive features: Search feature able to filter based on location, niche keywords, and company size, for example. Look for a platform with straightforward exports to Excel.
- Contact Information: What type of contact data does the platform include? Reliable access to all of the key decision-makers’ contact data makes the difference.
Other things to consider before purchase decision
- Cost and Benefits: Evaluate the cost of the software in relation to its features, keeping in mind the potential return on investment. How much is the added value from analysts' better time allocation? Read more about platform pricing below.
- Advanced Features: Look for features that best suit your specific workflow. Does it have features that other software don’t? How much manual effort is reduced with the software?
- Level of Customer Support: How personal is the customer support? Does the platform have a chatbot or human professionals at the other end of the line? A great platform paired with reliable customer service can address any issues or questions that may arise.
Deal sourcing platform pricing
The pricing strategies of deal sourcing platforms vary depending on factors such as breadth and depth of information, functionality, scalability, and target market. Many platforms offer tiered pricing plans based on the level of access to information and capabilities provided.
Deal sourcing platform prices are often based on a monthly, quarterly or annual fee for access to the software and support. In principle, yearly plans for deal sourcing platforms start at $10,000 minimum. Some deal sourcing platforms offer a free version with limited features, allowing potential customers to try the platform before committing to a paid plan. For example, Inven offers a free demo search session of the deal sourcing solution.
Typically standard, pro, and superior options allow customers to choose the level of functionality that aligns with their needs and budget. Most of the platforms have adopted a pay-per-user model, where the pricing is determined by the number of users accessing the platform.
The different packages vary with the provided data set coverage. Additional fees are charged for more extensive features and to include more in-depth data. Aspects that affect the pricing are such as access to company executive contacts, plug-ins and additional analysis tools. Often data from different geographical areas can be separately priced, for example, within Europe, US or global data.
Instead of subscription based pricing, some platforms are offering a fee per download. For example, Orbis offers both of these options. Downloading the financial data can form a separate cost.
All deal sourcing platforms aim to support their customers to find a preferred package with superior value, providing M&A professionals with the tools they need to gain actionable insights.
Benefits of using deal sourcing software
Investing in the right deal sourcing software can be a game-changer for PE firms and IBs. First, it likely results in access to more potential acquisition targets with increased efficiency. Deal sourcing software automates the process of identifying potential targets, reducing the time spent scrolling through companies’ websites. The more stable deal flow helps IBs and PEs to close more deals, ultimately achieving greater financial success.
Second, deal sourcing platforms provide access to comprehensive data. This means rich data points from the identified companies with one glance. Once DSP has run the search according to desired parameters, it combines a list of companies with headcount, ownership structure, and contact details available at one glance.
Third, M&A deal sourcing platforms have a different reach and scope, spanning various industries and nation-wide or global markets. All the data derived from DSP searches ensures IBs and PEs have a larger pool of good targets to begin the acquisition process with. This will expand the scope of potential investments and eventually make due diligence faster as well.
Conclusion: More coverage, less time wasted
There are many different deal sourcing solutions on the market, so it's important to consider your needs and requirements. The platform's features, market scope and cost-effectiveness all play a role in the final decision. Comparison will help you choose a platform that doesn’t leave any area uncovered. See how Inven compares to Sourcescrub or Cyndx.
A great deal sourcing software supports M&A professionals to detect more deals through uncovering hidden gems. They cover more markets with greater accuracy than manual desktop search and save weeks of analysts’ time. Overall, the use of deal sourcing platforms can help improve the quality of deals secured and increase their potential return on investment.
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