Analysis of PE BD Professional Backgrounds
Matt Rooney
I help Mid-Market Private Equity firms hire exceptional investment and business development professionals. Co-Host of The Deal Sourcery Podcast
About the Report:
To gain a deeper understanding of trends within the Business Development/Deal Sourcing functions at Private Equity firms, we have conducted an extensive analysis of the backgrounds of current BD professionals. The "background" as referred to in this report is the prior experience before first breaking into PE BD.
This report is based on data sourced from both public and proprietary information, meticulously gathered and analyzed to provide an accurate snapshot at this point in time.
The research and findings presented in this report were conducted by Coastal Partners.
Table of Contents
Snapshot of the BD industry
A message from Matt Rooney
Who is your typical BD Professional?
Analysis of backgrounds
Analysis of BD & fund sizes
Hiring Update: BD hires in last 12 months?
Industry Snapshot
385 PE firms have at least one dedicated BD professional.
In those firms, there are 806 dedicated Business Development professionals.
24% of all dedicated BD professionals are at PE firms with fund sizes between $500M and $1B.
A Message from Matt Rooney
A question I'm frequently asked is, "what are the most common profiles of private equity business development professionals?"
The short answer is 1) ex-investment bankers, 2) deal team members turned BD professionals, and 3) former salespeople. But these three groups only make up about ~40% of the entire pool of PE BD. Understanding the typical backgrounds of PE BD professionals is beneficial, but hiring firms need to consider additional factors to ensure they make the right choice.
When considering a BD hire, it's crucial to ask yourself a few key questions: What are our most important sourcing channels? What type of engagement is needed to develop these channels? What is our budget for a dedicated BD hire? Is this person targeting add-ons or platforms? How far do we want this person to carry the transaction?
Consider the most desired attributes for BD professionals: They need strong organizational skills to manage contacts, conversations, and pipeline activities effectively. Presence and likeability, or the "airport test," are vital—business owners and intermediaries prefer engaging with someone they like and who they can trust has influence at their firm. An 'investor mindset’ or investment experience is also essential for being effective at screening opportunities as well as bringing substance to conversations with bankers and business owners. The ability for a BD person to say 'no' and save the time and effort of the deal team for opportunities that are a clear 'yes' is crucial for many firms.?
Recent trends highlight the varied landscape of approaches to building BD teams. For firms prioritizing intermediary channels, investment bankers offer transaction experience and existing relationships within the banker community. Anecdotally, bankers prefer working with those BD professionals who have prior deal experience and are someone they can trust has influence at their firm.?
For firms prioritizing proprietary outreach, candidates with sales backgrounds are often experienced in nurturing contacts throughout long sales cycles and are comfortable in high-volume outreach environments.
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Another avenue to consider - transitioning a PE investment professional who can leverage their deal experience to take opportunities further, be a better filter, aid in conversations with contacts, and seamlessly find the right level of integration with deal team counterparts.?
The emphasis on finding candidates with prior deal experience has grown, as more firms have already added dedicated BD resources to organize inbound deal flow and do cold outreach to targets. A common theme that arises in our work is that bankers and business owners prefer to interact with those BD professionals that are tenured, have influence at their firm, and have relatable deal experience they can speak to.
Hopefully the insights in this report will serve as a valuable tool for any firm considering a dedicated BD hire. The right BD professional will significantly improve your deal sourcing and capital deployment in an increasingly competitive market.
My aim, as always with the content I share here, is to peel back some of the layers of BD roles in PE, providing insights for those considering building a BD team or pursuing a role in this space.