The private equity industry, like the wider business world, is reliant on the building of strong relationships as one aspect of success. The use of online platforms from forums, to social media, and now financial solutions such as the one offered here at DealMarket, means relationship building is easier and more global than before. Consequently, the financial sector is increasingly seeing more activity in terms of connecting and doing deals online.
Here are 10 reasons you should source investment deals online.
1. Experience a World of Deals
Your aim is always to find the best deals, and the best way to find them is to make sure you have enough deals in front of you in terms of quantity. You need to have enough deals to compare to ensure you make the right investment decisions. When you look at a wide cross section of deals, it’s often easier to spot the ones you want to leave well alone, too!
In the modern world, more deals are being exclusively offered online than ever before. Investors also have the option of taking a global view of where they’ll invest.
2. Provides More Transparency
Sourcing for deals online provides more transparency. You are able to gather information regarding the deal separately from the parties you are dealing with. You are able to learn about previous clients and deals – and even discuss a deal or the wider industry landscape with third parties.
The best part about this transparency is that this goes both ways, as you are able to provide more information about yourself as well, whether you are an investor or a business looking for equity. A 2010 study by David Teten and Chris Farmer found that the best-performing investors benefit from an open discussion of their investment thesis by improving the way they are perceived, something a strong online presence can boost. If you want more transparency, then source deals or put your own deal online.
3. Focus on the Right Niche
As an investor, you probably have a specific niche area you focus on. Your years in the field or in your career elsewhere have given you expertise in a specific field, and you want to find the deals that best fit your portfolio – something that becomes simpler as you start sourcing deals online. You have a number of platforms available, with each providing something different. Although the number of deals available will be greater, you’ll also have the choice of filtering the deals you want to see.
No more searching through to find the deal for you; simply search the sector you’re looking for and you’re ready to go.
4. Makes the Process Faster
The above points all help make the deal sourcing process faster. If you think of these in the context of how you currently invest, and shift the whole thing online, you’ll save a tremendous amount of time.
5. Saves You Money
‘Time is money’ is a cliché, but definitely a mantra worth repeating. It also perfectly fits the process of sourcing deals online. You can save a lot of time and, indeed, money when you look for investment deals online.
Administrative costs come down, and online deal platforms can automate much of the process for you, guaranteeing you have more time to focus on sourcing other great deals or managing other parts of your portfolio.
6. Find More Lucrative Deals
You aren’t just saving money when you move your investing online, you’ll make more money as well. You improve your competitive advantage by being online, as an increasing number of private equity firms, individual investors, and deal seekers now understand things like social media can greatly enhance their brand value. On the other hand, most start-ups are already taking advantage of being online, and the likelihood of finding the next big business opportunity online is much higher.
7. Boost Your Networking Opportunities
Previously, deals were usually sourced and closed within a few established relationships. Not only do you have the ability to create more networking connections, you can also nurture these connections better online. Although face-to-face communication should never disappear from your deal-making agenda, you can continue staying in touch much more easily online, while platforms like Skype or Go To Meeting can offer an ‘in person’ element even if you’re on the other side of the world.
These factors can all boost your deal sourcing opportunities in the future and result in improved deal flow.
8. Compete in a More Equal Platform
The internet has proven to be a great leveller in all industries, not just finance. Specifically looking at private equity, bigger firms used to have the upper hand in finding deals or while negotiating terms. Now, sourcing deals online gives everyone an equal footing. Even if you are an independent investor, you can still go after the same deals as big investment firms. On the other hand, companies sourcing for buyers can also attract the bigger firms through investment platforms. While online platforms mean there is more competition, it has opened up the market brilliantly and ensures more equality and opportunities for even the new and small firms and businesses to thrive.
9. Get More Information
Choosing which deal to close is always down to having an intimate understanding of what each opportunity is about. When you are sourcing deals online, the amount of information available is astonishing. Not only are you able to learn more about the potential partner in your deal, but you can also get more data regarding your own past deal behaviour, previous performance across the industry, and much more.
The more data you have at hand, the better deals you will make in the long term. It isn’t a guarantee of success, but you’re arming yourself with all the information available to make the best decision. Online deal platforms will ‘crunch the numbers’ and interpret the data for you, too, minimising the likelihood of mistakes and reducing human error both in calculations and decisions.
10. Repeat the Success Story
Sourcing for deals online makes repeating success stories easier. While no two deals are the same, and you need to factor in economic variables and the ever-changing investment marketplace, if you find a deal opportunity in three years’ time similar to a successful one you just invested in, immediately you’ll have that confidence to go for it.
The private equity marketplace is increasingly shifting towards becoming an online entity, with thousands of deals already available across various platforms. Investors that aren’t online and seeking deals in this way simply aren’t “where the action is,” and will miss the best opportunities in the longer term.
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