Deal origination for private equity real estate teams: 6 key do’s and don’ts


Whether you’re a major investment firm or a startup, deal origination requires that you nurture relationships and build connections even during tumultuous times.


What is deal origination?

Deal origination encompasses the entire lifecycle of a deal, from initial deal sourcing to finalizing the paperwork. To streamline and improve their deal origination, private equity firms, investment banks, and venture capital firms need to optimize how they collect leads, and have the ability to identify and prioritize their highest-quality leads.


But what is the best way to pursue these relationships? And what best practices can you follow in the private equity real estate (PERE) market in particular?


Below we offer do’s and don’ts for building your connections and deal pipeline in the increasingly competitive PERE market.


Do consider alternative deal channels (like social media)

Decades ago, the deal origination process started and ended at home. Dealmakers’ contacts and target companies often resided in their own home cities, and lead sourcing often relied on in-person referrals and outreach. Investors who wanted to pool their capital might invest in projects like local condominium developments, which were built on face-to-face handshake deals.


Today, the market is wide open. With globalization as a major driving force, investors are looking around the world for better investment opportunities — and where they want to invest (such as the Sunbelt) isn’t necessarily where they live. They’re working with intermediaries, checking valuations online, and using self-service deal-sourcing platforms. They’re also using LinkedIn, Twitter, and other social media venues to develop B2B connections.


To capture these leads in today’s connected world, your firm needs a strong social media presence. To achieve that, you can increase your visibility on social media by targeting a niche, such as a geographic region or a type of real estate. Go where the investors and corporate finance professionals are: . And on your social media accounts, focus on sharing high-quality content: Discussing localized real estate trends, for example, can be an excellent way to of build authority.


Do make time for personal relationships and one-on-one touchpoints

When markets constrict, every dealmaker feels the pressure to build ROI. Even during the busiest of times, though, it’s important to keep up personal relationships. People do business with people they know, like, and trust. By using technology to streamline your sales process, you can free up more time to build and maintain your relationships.


According to McKinsey, “more than 30% of sales-related activities can be automated.” Such activities include lead qualification and identification, deal origination strategy development, and forecasting.


By pursuing automation in these areas of your deal-sourcing process, you can spend more time building personal relationships. With DealCloud’s lead-scoring algorithms and relationship management tools, you can automate minor touchpoints like emails, prioritize the leads most likely to convert, and reduce your lift while generating leads.


Do engage in intelligent outsourcing and offshoring

Traditionally, dealmakers have been hesitant to outsource or offshore: They don’t want to sacrifice the quality of their connections, and they worry that outsourced teams might be unresponsive or unavailable. But technology is now available to make outsourcing and offshoring an easier, more cost-effective method of acquiring leads.


Since commercial real estate slowed in Q3 2022 due to inflation, geopolitical events, and other factors unlikely to go away any time soon, many PERE teams are likely to find themselves tightening their belts as the economy finds its footing. Even the best dealmakers can’t fight global economic change, and they will need to do more with less. By outsourcing, your firm can bring in more leads for your dollar.


Cloud-based dealmaking platforms like DealCloud make it easy to interface with outsourced origination teams. DealCloud helps outsourced teams operate fully asynchronously while keeping dealmakers up to date, as everyone operates within the same central data repository. With automated data capture and reporting capabilities, up-to-date firmwide transparency becomes attainable even remotely.


Don’t ignore the threat of new regulations

Regulations change often for fintech in PERE, so your firm needs to remain cautious, as new regulations of new technologies could alter the value of some investments. Complete your due diligence and keep up to date on new technology, investments, and startups.


It’s still unknown how regulations will impact blockchain technologies or investments driven by neobanks. However, the Treasury Department’s Financial Stability Oversight Council has suggested enforcement of existing regulations along with assessments of gaps.


DealCloud helps you complete your PERE due diligence and assess your risk with custom checklists, data consolidation, and improved collaboration. Work with your legal team within DealCloud to verify the risk profiles of new prospects, including startups that may deal with new tech. Third-party data synced in DealCloud will help identify potentially risky relationships with fintech or neobank companies.


Don’t pursue leads or make deals based on faulty data

Today’s dealmakers need to collect information from many disparate sources. Without the right technology, this practice increases the odds of incomplete or incorrect data pools.


If your firm doesn’t consolidate and normalize the data it gathers, subsequent analyses are unlikely to be accurate or meaningful. For example, if one of your dealmakers syncs an old data set, other team members might assume a lead is high quality when it’s not. And then there’s the time factor: If your team still works with Excel spreadsheets, they’re probably spending a lot of time just chasing down the data they need.


Improve the strength of your deals by using technology to consolidate your information into a single source of truth. DealCloud’s data integration taps third-party PERE data while collecting and consolidating first-party data — helping your teams stay current on new businesses, developments, and relationships. Working in DealCloud, your dealmakers can view your company’s dealmaking interactions in real time, and respond quickly to any major changes.


Don’t let leads die on the vine

Dealmaking can happen fast in a highly connected world, and when you’re juggling a lot of prospects, it’s easy for things to slip through the cracks. But dealmaking is all about connecting with people at the right time — and you can lose a lead entirely if you’re unavailable to them at the wrong time.


Not to mention, other firms are already pursuing the same leads you are. This presents significant challenges, as no one can be personally available at all hours. That’s why DealCloud’s collaboration services connect your teams through a cloud-based, always-on system: Even if you don’t have the time to connect with a lead, someone else on your team will. Thanks to the real-time data and updates in the DealCloud platform, your team will know exactly where all deals and interactions stand at any given moment. DealCloud’s fully configurable workflows also enable your firm to craft the steps your team needs to take.


See how DealCloud helps Balfour Pacific Capital stay on top of fast-moving deals even while team members travel.


Let DealCloud streamline your deal origination

As the world keeps moving toward increasingly sophisticated digital operations, it’s critical for your firm to modernize its technology. DealCloud can help you put these do’s and don’ts into action by providing you with a single source of truth for your deal origination activities.


More than just a CRM, DealCloud was designed specifically for the financial services industry, including venture capital firms, PE firms, and CRE. It delivers the latest features and capabilities that your teams and dealmakers need each day, and is continually updated to evolve and adapt to firm needs and current and future challenges in the industry.


Learn more about managing deal origination in DealCloud. Sign up for a demo today.


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Katlyn Kohler

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