Origination and Deal Sourcing¶
Overview¶
Origination — the practice of finding and winning new deal mandates — is a foundational function in both investment banking and private equity. In the lower middle market, where transactions involve privately held business owners making the most significant financial decision of their lives, origination is deeply relationship-driven. The function has evolved significantly over the past decade, with BD professionals becoming more sophisticated and specialized.
Key Perspectives¶
- Kate Hopkins provides the Portfolio Operations perspective in Ep. 2, arguing that portfolio ops is increasingly a sourcing channel — not just a post-investment function. She describes a sourcing enablement funnel that deploys ops capabilities (content, events, expert introductions, community access) across the sourcing process. Her core thesis: firms should apply sales enablement principles to sourcing, using portfolio data and ops infrastructure to create data snacks, battle cards, and prospect-facing content.
- Chris Reilly provides the banker's origination perspective in Ep. 23: Deals Still Run on Relationships, detailing VRA Partners' three-channel model and the KPIs they track.
- Jake Colognesi provides the growth equity buyer's perspective in Ep. 20, describing Mamba Growth's all-hands sourcing model where everyone from analyst to founding partner sources, cold calls, and meets entrepreneurs. He favors the hybrid model (source + execute) over dedicated BD teams, and emphasizes tight investment lens definition as the foundation of effective company identification.
- Glenn Oken provides the seasoned buyout operator's perspective in Ep. 21, describing Mangrove's dedicated 3-person BD team processing ~3,000 deals/year. He emphasizes precision and discipline in intermediary coverage, IC inclusion for all team members, and exit storytelling as the most powerful sourcing message.
- Ryan Murphy provides the first-year sourcing associate perspective in Ep. 22, describing how he uses peer, advisor, and banker networks as complementary channels at Norwest. He emphasizes breaking through the noise with personalized subject lines and unique background hooks, and the sponge mindset of learning by observing senior colleagues.
VRA's Multi-Channel Origination Model¶
Chris Reilly describes VRA's four origination channels, with his team of three focused on the first three:
Channel 1: Referral Sources / COIs (Primary)¶
The "vast majority" of the origination team's time. See Referral Networks and COIs for full detail. Key sub-channels include strategic partnerships with wealth management platforms, M&A attorneys, and other centers of influence who interact with business owners.
Channel 2: Sponsor Coverage (Secondary)¶
Covering middle market and lower middle market PE funds, independent sponsors, and capital providers. This serves two purposes: 1. Intelligence gathering: Understanding market valuations, value drivers, portfolio composition, and sector trends — all useful for business owner conversations 2. Buy-side mandates: VRA has a growing buy-side practice, working with sponsors on platform searches and add-on acquisitions (historically more corporate buy-side work, now expanding to sponsor-backed)
Channel 3: Direct Outreach (Tertiary)¶
Calling directly on business owners, typically "chasing success" from closed transactions in similar sectors. The outreach uses a mix of voice, email, and direct mail. Hit rates are lower than referral-sourced opportunities, but Chris notes that in-person meeting requests get dramatically higher response rates than transactional calls.
A key tactic: building direct calling lists for a target market, then sharing those lists with COI partners as a goodwill gesture — "do you know any of these businesses?" This creates value for the COI while expanding VRA's reach.
Channel 4: Former Clients (Execution-managed)¶
Not managed by the origination team. Execution bankers maintain relationships with former clients, who often return for subsequent transactions or refer peers.
Origination KPIs¶
| Metric | Type | Description |
|---|---|---|
| Market visits | Leading | Frequency of in-person visits to priority markets |
| Pitches / shots on goal | Leading | How often the team gets to pitch a business |
| Win rate | Lagging | Pitches won vs. lost |
| Revenue | Lagging | The ultimate measure — fee revenue with origination attachment |
Geographic Market Strategy¶
VRA prioritizes markets by density of COI relationships — cities where they have an abundance of established referral partners. Key markets include Dallas, Tampa, New York, and Chicago. The team anchors market visits on key relationship meetings, then builds a calling list of direct targets and COI visits around those anchors.
Seasonality: Travel is heaviest late January through Memorial Day, tapers in summer, picks up again Labor Day through Thanksgiving. On average, someone from the team is traveling every other week.
Conference strategy: Selective attendance at ACG events (Atlanta, M&A South, DealMax, Florida). Also leverage one-on-one meetings organized by law firms as efficient ways to get into a market and build density.
The Evolution of the BD Professional¶
Chris observes that the BD function in private equity has "dramatically changed" and become "a lot more sophisticated" over his decade at VRA: - Then: "Teaser gatherers" — collecting deal teasers without deep engagement - Now: Execution-experienced professionals (from banking or PE deal teams) who know criteria deeply, articulate thematic theses, and bring genuine market intelligence
This sophistication is welcomed on the banking side — it makes qualification faster and relationships more productive.
Episode Coverage¶
| Episode | Guest | Angle |
|---|---|---|
| Ep. 2 | Kate Hopkins | Portfolio ops as sourcing channel: content, events, enablement, network leverage |
| Ep. 20 | Jake Colognesi | Mamba Growth's all-hands sourcing model, hybrid vs. dedicated BD, investment lens definition |
| Ep. 21 | Glenn Oken | Mangrove's dedicated BD team, precision and discipline, 3,000-deal funnel, exit storytelling |
| Ep. 22 | Ryan Murphy | Junior sourcing view: peer/advisor/banker networks, breaking through noise |
| Ep. 23: Deals Still Run on Relationships | Chris Reilly | VRA's three-channel origination model, KPIs, geographic strategy |