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Ep. 6: How to Generate Predictable, Repeatable, and Scalable Deal Flow

Summary

Dan Herr and Matt Rooney tackle the feast-or-famine cycle that plagues most PE firms' deal flow. Dan's core provocation: private equity firms routinely push sales and marketing best practices on their portfolio companies — metrics, pipelines, accountability — yet fail to apply those same disciplines to their own sourcing functions. The episode lays out a systematic approach to breaking this cycle, centering on three pillars: measuring the right things, building granular pipeline infrastructure, and establishing structured accountability cadences.

The discussion begins with the distinction between input metrics (outreach volume, coverage compliance) and output metrics (top-prospect engagement, pipeline progression, capital deployment). Dan argues that measuring inputs alone incentivizes box-checking — team members blast off low-value emails just to hit a number — whereas output-focused metrics like "what percentage of your top prospects have you engaged this quarter" push behavior toward the creative, high-impact work that actually moves the needle. He then walks through how to build 10–15 pipeline stages in a CRM (versus the typical 4–5), enabling managers to cross-sectionalize their pipeline and identify exactly where top prospects are getting stuck for each team member.

The second half addresses how to translate metrics into sustained performance. Dan lays out five meeting cadences — from annual goal setting to weekly one-on-one coaching — and argues that most firms hold these meetings but use them as passive readouts rather than for accountability, course correction, and collaborative problem-solving. The hosts also explore how firm strategy (buy-and-build, traditional LBO, growth equity) should shape which outputs matter most, how individual targets should vary by experience and ramp curve, and how pod structures can organize sourcing effort around end markets or geographies. A substantial sidebar covers the shifting power dynamic between investment bankers and PE buyers, the rise of fireside chats over broad auctions, and what the future of investment banking may look like in a tech-enabled world.

Key Takeaways

  • PE firms should apply the same sales metrics discipline internally that they push on portfolio companies — "you get what you measure"
  • Measure outputs (percentage of top prospects engaged, quality interactions, pipeline progression) rather than inputs (total outreach volume, emails sent) to avoid incentivizing box-checking behavior
  • Build 10–15 pipeline stages in your CRM rather than the typical 4–5, enabling granular visibility into where prospects are stuck at each stage
  • Automate pipeline stage updates — nobody will manually update 10–15 stages after every interaction
  • Vary individual deployment targets by experience level and ramp curve: a first-year BD professional may take 12–18 months to ramp, while a tenured senior may carry a $60–100M annual deployment target
  • Sourcing strategy should dictate metric focus: buy-and-build firms measure add-on volume and velocity; traditional LBOs measure one to three quality deals per year; growth equity firms measure capital deployment velocity
  • Track proprietary vs. banked deal mix, and within banked deals, distinguish fireside chats from broad auctions to assess banker coverage effectiveness
  • Establish five meeting cadences: annual goal setting, quarterly course correction, monthly firm-wide progress updates, monthly group coaching on SLAs, and weekly one-on-one problem-solving
  • Use weekly one-on-ones for collaborative problem-solving on the top five prospects, not status readouts — minor account planning at five accounts per week yields ~250 prospects covered per year
  • The future favors firms with technology-enabled market visibility — some firms already see 80–90% of market transactions and pick their shots

Guest Background

This is a hosts-only episode. Dan Herr draws on his experience building and leading sourcing teams (having sourced over a billion dollars in transactions per the intro), while Matt Rooney brings the recruiting and labor-market perspective from placing BD talent into PE firms at Coastal Partners.

Topics Discussed

  • Origination and Deal Sourcing — systematizing deal flow to eliminate feast-or-famine cycles; applying sales best practices internally
  • BD Team Structure and Compensation — pod structures pairing sourcing and investment professionals; setting individual vs. team goals; varying targets by seniority and ramp curve
  • Evolution of PE Sourcing — shifting power dynamics between investment bankers and PE buyers; future of investment banking in a tech-enabled, potentially self-service world
  • Engaging Boutique Bankers — measuring banker coverage effectiveness; fireside chats vs. broad auctions; assessing whether closed deals came from covered bankers
  • Sourcing Culture — accountability frameworks, naming-and-shaming at monthly investment committee, best practice sharing, coaching cadences
  • Value-First Outreach — quality over volume; spending time on one creative angle for a needle-moving prospect rather than blasting low-value outreach

Notable Quotes

"We all have these portfolio companies where we're pushing sales and marketing initiatives and best practices on them. And we have all these metrics for our sales professionals. But for some reason, we don't dogfood that inside of the firms." — Dan Herr

"You get what you measure." — Dan Herr

"Don't send those five or 10 BS emails or voicemails or whatever. Gosh, if you could spend that time to come up with one, just one super creative angle and break into that one needle moving top prospect that's been sitting there that we just haven't been able to get in front of." — Dan Herr

"It takes 12 to 18 months for a new person in a sourcing role to really kind of get up to speed and find their legs." — Dan Herr

"Goals are nothing if you don't perform." — Dan Herr

"You have two of the best, smartest minds in sourcing at the table together right now. What's the best and highest use of your time? To me, the best use is for that to be a problem solving session." — Dan Herr

Frameworks & Concepts

  • Inputs vs. Outputs Metrics — Dan's framework for shifting measurement from activity volume (calls, emails, coverage compliance) to engagement results (top-prospect conversations, pipeline progression). The key test: "What percentage of your top prospects have you engaged in the last quarter?"
  • Granular Pipeline Stages — Dan's advocacy for 10–15 CRM pipeline stages (new → first outreach → reply → quality interaction → face-to-face → investment team looped in → NDA/financials → IC presentation → IOI → management meeting → LOI submitted → LOI signed → closed won/lost/passed) versus the typical 4–5, enabling cross-sectionalization of where prospects stall
  • Sourcing Accountability Cadence — Dan's five-meeting structure: annual goal setting and strategic decisions, quarterly course correction, monthly firm-wide progress updates (with naming-and-shaming and best practice sharing), monthly group coaching on SLAs, and weekly one-on-one problem-solving sessions
  • Sourcing Pods — team structures pairing sourcing professionals with investment professionals (and sometimes partners) around end markets, geographies, or coverage types, with goals calibrated to pod composition and market potential

Cross-References