The Private Equity Podcast, by Raw Selection

How Private Equity firms can increase deal generation with Brian Scanlon

Jan 2, 2024

Brian Scanlon, managing partner at Deal Gen Partners, discusses PE deal origination strategies, mistakes PE founders make, growing a PE equity fund, and what PE should start doing differently in deal origination. He also talks about the mindsets of founders who want to sell their company, overcoming negative bias in PE, and his likes and dislikes about private equity.

23:07

Episode guests

Brian Scanlon

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Episode notes

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Quick takeaways

Private equity firms should prioritize deal generation to increase their deal flow.

DealGen Partners uses technology and coaching to help business owners make informed decisions about selling their company.

Deep dives

Importance of Deal Generation for Private Equity Firms

Many private equity firms assign deal generation work to inexperienced professionals, which can limit their deal flow. Firms that prioritize deal generation are more successful in finding and closing deals. Some successful firms focus on hiring professionals who have experience in selling companies, as they can better understand the perspective of business owners and resonate with them. It is important for private equity firms to prioritize deal origination and not overlook the effort needed to find and source good deals.

Introduction

4min

The Role of Business Development in Private Equity and the Importance of Dedicated Sponsor Coverage

4min

Founder Mindset and Managing Expectations

9min

The Pros and Cons of Working with Private Equity

2min

Discussing the Influence of a Podcast and Learning from Successful Funds in Private Equity

5min

Introducing Brian Scanlon

Brian Scanlon is the managing partner at Deal Gen Partners, a deal-generation service sourcing deals for Private Equity Funds and Strategic Acquirers. Currently, DealGen Partners manages $2.7B in buy-side mandate and has generated over $900M in deal value. DealGen's combination of outreach strategy and network of partners brings private equity and strategic acquirers the perfect targets for their deal criteria.

What You Will Learn

PE deal origination strategies for top PE funds

PE firm acquisition and mindset playbook

Mistakes PE founders make when they sell

Breakdown

[00:56] Getting to Know Brian Scanlon

[01:41] One Mistake PE Firms make and actions to correct it

[04:39] Growing a PE equity fund

[06:32] What PE should start doing differently in deal origination

[09:09] The mindsets of founders of PE firms that want to be acquired

[12:35] Questions PE founders don’t ask but want to know

[16:26] Overcoming negative bias in PE and opening up for potential sales

[17:58] Things Brian Likes and Dislikes about private equity

[19:44] Brian’s Go-To Self-Improvement Resources

[23:52] Parting Thoughts

The Mindsets of PE Founders

What is the mindset of PE founders who want to sell their company? It depends on the industry and how vast the owner is in what the transaction will look like. When we move towards manufacturing, logistics and blue-collar types of businesses, typically, these are business owners who have been building firms for 20-30 years and are looking to exist. They have a different notion of what a transaction would look like than a start-up tech founder who is building something with the intention of selling. According to Brian, they usually see owners move through a progression from thinking about selling to reaching out to friends to see what they sold for and how the transaction looks like to, which is not applicable to their business as every business is different, and they only get 30% of the right information. Some hire valuation funds to see what they think they are worth, and that’s great. They are going to be at the ballpark of the standard deviation of what they are worth, but it’s not the feedback from the people who are going to write them a cheque to acquire the company, which is the most useful feedback. According to Brian, the PE founders' mindset is usually a little hesitant, and the biggest challenge is their expectations vs. true valuation from funds. You can think you’re worth 10 times your bottom-line, but if they are willing to pay you 3, that’s what you are worth.

How to Contact Brian

Brian on LinkedIn

dealgenpartners.com

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