Healthy Dealflow?

July 13, 2018

by a searcher from The University of Chicago - Booth School of Business in Sacramento, CA, USA

What can be considered a healthy Dealflow? I am a self funded searcher with geographic constraint. I have only been able to find probably 5 reasonable deals (fitting my criteria) in the past 2 months.
This seems to be a weak dealflow. Jim's blog (http://jimsteinsharpe.com/searching/making-the-offer/) mentions that one should be submitting 2-3 LOIs on a monthly basis. I am having difficulty even finding 2-3 deals per month. So what is considered a healthy dealflow?

Admins: can this be added as a survey question in the resources -> questions section?

Thanks Vijay

23 Likes

16 Replies

282 Views

Replies

Reply by a searcher
from University of Nijenrode in Lisse, Nederland

Hi Vijay, I am self-funded with a geographic constraint (in Europe). The key regarding deal flow in my mind is still to get as much letters/emails out as possible following the proprietary prospecting method as described by Jim. My positive seller response rate is around 10%, so the more letters I sent out the more deal flow I get ( (i have access to a local database where I can filter on 'location' and ‘seller age’, which helps). The typical response rate is between 5%-7% incl rejections, as per Jim. However, I had to lower some of my search criteria (e.g. size) and I am looking at far more industries than I had foreseen in order to keep getting new letters out on a daily basis. Maybe you should look at your criteria once more and decide what changes you can make/ accept in order to increase the potential target group in your area?

Reply by an investor
from University of Virginia in Tampa, FL, USA

Vijay, we are also self-funded with a geographic focus. It's a really different strategy compared to the funded, nationwide approach, which we think is much more of a "spray and pray" approach with a lower hit rate. With your approach, you should assume the volume will be lower, but the hit rate should be higher. Meet with sellers in person, really dig into local resources (e.g. chambers of commerce, LinkedIn, etc.), tell a convincing story about your investment in the local market, meet with intermediaries, etc. It's an entirely different strategy, so you have to adjust your tactics. Happy to chat more if you'd like.

+14 more replies.

Join the discussion