10 Best Practices For Deal Flow Mgt

10 Deal Management Best Practices:

1. Automate Deal Pipeline Reporting

2. Track and Analyze Deal Referrals

3. Integrate Online Data Sources

4. Separate Deals and Deal Opportunities

5. Quantify Reasons Deals are Won and Lost

6. Streamline Deal Management Processes

7. Monitor Your Most Important Deals

8. Configure, Configure, Configure

9. Stay Connected on the Road

10. Generate Capital Calls Quickly and Precisely

Subscription Service - A feature of a deal management system’s reporting engine thatenables users to subscribe to recurring reports (e.g. weekly deal pipeline).

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10 Best Practices for Deal Management Software

Deal-flow is the lifeblood of private equity, venture capital, and real estate investment firms. Yet, with the economy on a sluggish road to recovery, the sourcing and acquisition process continues to require an extraordinary amount of time and effort. How can you keep up? Deal management software—often a module of Customer Relationship Management (CRM) platforms—is typically seen as the answer. However, if these systems aren’t sophisticated enough to handle the complexities of the alternative assets industry, they will ultimately fail to deliver on their promise.

Having helped alternative investment firms streamline their deal management processes for more than a decade, Netage Solutions has compiled the following 10 best practices for deal management software. By incorporating these best practices, investment professionals can be more efficient and effective, thereby enabling their firms to source and close more profitable deals.

1. Automate Deal Pipeline Reporting

The Monday morning partners meeting can be very stressful. With important investment decisions on the line, the last thing your deal team needs is a weekly fire drill to prepare or update the deal pipeline report.

Your deal management software should have a Subscription Service for scheduling and automatically distributing recurring reports, such as your weekly deal pipeline report. That way, when your deal team gets in the office on Monday mornings, the report is waiting for them in their inboxes.

To ensure the most up-to-date information is presented, many firms distribute a draft report on Friday. This reminder prompts the team to add or edit deals before the final version is sent out Monday morning. If the updates still haven’t been made—and a deal isn’t in the report—some firms won’t even allow it be discussed in the meeting.

2. Track and Analyze Deal Referrals

Maintaining strong relationships with investment bankers and brokers is crucial to generating deal referrals. Like any process, though, what can't be measured, can't be improved. By tracking and analyzing referrals, your firm can better direct its efforts and obtain higher quality referrals.

A Netage Solutions Whitepaper

To effectively track referrals, your deal management software should have Roles, which allow you to link a contact and/or an organization to a deal as the “referrer”. (Note: you can also use Roles to designate other key players, such as attorneys, consultants, lenders, co-investors, etc.) This role should be unique to each deal, because individuals/organizations often play different roles on different deals (e.g. Joe Banker is the “referrer” on Deal A and the “consultant” on Deal B).

Over time, you can identify your best referral sources by running a report that lists all of the deals that were referred in a given period and by whom. The report should also break out which deals closed, which were turned down, and which are active in the pipeline. As a result, you can see who is sending you the most deals (quantity), and who is sending you the best deals (quality). This intelligence can help you determine which relationships should be more actively cultivated.

3. Integrate Online Data Sources

Investment professionals rely on a variety of online data sources (e.g. CapitalIQ, Hoovers, Yahoo! Finance, LinkedIn, etc.) for deal origination, due diligence, and networking purposes. Because these data sources are often disconnected, synthesizing and utilizing information can consume valuable time and energy.

Your deal management software should have a Browser Panel that intelligently integrates external data sources, allowing you to view context-specific information without leaving the application. Targeted information can be retrieved by passing specific fields (e.g. company name, ticker symbol, address, etc.) to these sites. That way, when you’re in a deal or contact record, you can instantly view additional information.

The data integration possibilities are endless: company fundamentals from CapitalIQ or Hoovers; stock prices and market data from Yahoo! Finance; news and press releases from Google News; a map of the company’s headquarters from Google Maps; LinkedIn profiles for contacts; and more. These data sources can become a seamless part of your workflow, making you more efficient and effective.

4. Separate Deals and Deal Opportunities

Occasionally in private equity investing, the same deal comes around more than once. You might evaluate a promising young company, but ultimately turn down the deal because the market isn’t mature enough. If you take another look at the business two years later, you’ll want to keep this round of due diligence separate from the previous one.



Roles - A feature of CRM ordeal management systems thatrun on a relational database.Roles allow you to create a unique relationship between tworecords. For instance, a contact can be linked to a deal and assigned the role of “Referrer”.

Browser Panel - A capability forintegrating online data sourcesinto a deal management system.A browser panel passesparameters to external sites, allowing users to view context-specific information, such as company fundamentals fromCapitalIQ and a contact’s LinkedIn profile.




To accommodate such scenarios, your deal management system should distinguish Deals, or the companies being evaluated, from Deal Opportunities, the discrete act of evaluating them. Regardless of the terminology used, you’ll be able to track multiple, distinct opportunities with the same company. Ideally, all relevant information – documents, correspondence, tasks, contacts, etc. – will be tracked separately as well, with the ability to roll up everything to the company level.

Because no data or records need to be overwritten, all history and context is preserved. You can quickly see why the deal was turned down initially and focus your due diligence accordingly. You can also more accurately report on deal-flow and team activities over time. 5. Quantify Reasons Deals Are Won or Lost

Often, the reason a private equity firm did or didn’t invest in a particular company is captured in a free-text notes field—which isn’t quantifiable—or worse, someone’s head. By structuring your deal management system properly, you can more easily quantify the reasons deals are won or lost, and identify trends that direct future deal origination and acquisition efforts.

Notes fields are fine for capturing anecdotal evidence, but they can’t quantify results. Your system should also have configurable Dropdown Lists for capturing reasons invested and reasons turned down. Dropdown lists enforce uniformity, which improves your ability to generate reports and perform other ad hoc analysis. For instance, you could group, filter, or sort a list of deals by the “reason turned down” field.

However you consume the data, you will start to see trends, especially when you incorporate additional data points, such as industry, region, revenues, and investment stage. For instance, you might notice that you’re firm is striking out in the pharmaceutical industry and decide to focus instead on medical devices, where you’ve had more success.

6. Streamline Deal Management Processes

Deals move through the pipeline because of a variety of different tasks and processes, some more structured than others. There are personal reminders to follow up on a specific date and time; one-off tasks for you or other team members; and more defined processes that should happen automatically at different stages in the deal lifecycle. Your deal management system should manage all three.

Deals - A term used by certaindeal management systems for the companies that are evaluated by private equity or venture capital firms.

Deal Opportunities - The discrete act of evaluating companies (a/k/a Deals). Occasionally, a firm needs to track multiple Deal Opportunities with the same Deal.

Dropdown List - A feature of deal management systems that allows users to choose one or more values from a list. Dropdown lists make it easier to quantify business results, such as the reasons deals are won or lost.


For personal follow-ups and reminders, many deal management systems use Flags. Users can “flag” any item (e.g. a deal or contact) for follow up on a specific date, and add a note with the required action or other pertinent information. Flags typically integrate with an e-mail program such as Microsoft Outlook®, so that an automated reminder pops up at the designated time.

In addition to Flags, your deal management system should have Tasks, which can be assigned to the creator or another team member. Tasks can be given a due date, as well as a priority, allowing users to prioritize their workload. And because they’re visible to everyone, your firm can avoid the “black hole” of email and have more accountability and visibility into progress with your deals.

At a more advanced level, some systems allow you to build Workflows that trigger actions when certain conditions are met. One example is sequential reviews: once a specified person has reviewed the deal financials, the system will automatically create a task and send notification to the next reviewer. Specific tasks can also be created when a deal’s pipeline status changes. On the other hand, if the deal has been ‘static’ for a certain amount of time, the individual responsible can be notified or the status can be changed.

7. Monitor Your Most Important Deals

Like other knowledge workers, investment professionals are constantly bombarded with data. To avoid information overload, they must apply various methods for filtering out the “noise” and focusing only on that which is most important.

This concept applies to deal management systems, which often house large quantities of data. Regardless of whether it has 10 or 10,000 records, your system should have a mechanism that enables you to focus on the handful of deals or contacts that are most important at any given moment. In some applications, this mechanism is a Watchlist, or a running list of updates for the records you’ve selected. For best effect, this report should be prominently featured on the application homepage.

At a glance, users can monitor updates to important records, including new activities that were added or fields that were changed, when the updates were made, and by whom. Investment professionals can easily see all activity related to their active deals or portfolio companies. They could even monitor deals they’ve sourced to ensure they’re awarded proper deal credit. However the report is used, the system pushes important information to you, versus you having to pull it from the system.




Flags - A feature for trackingpersonal follow-ups and to-dos. Any item can be flagged for follow up on a specific date. Similar to the Flag feature within Microsoft Outlook®.

Tasks - A feature for trackingspecific actions that must becompleted. Tasks can be assigned to the creator or another team member, and given a due date and priority.

Workflows - A structured process that triggers pre-defined actions or tasks when certain conditions aremet. For instance, a task can automatically be created when a Deal’s status changes.

Watchlist - A live, dynamic report that provides a running list of updates to selected records. Investment professionals can use a Watchlist report to monitor theirmost important deals.



8. Configure, Configure, Configure

Another good way to filter out “noise” is to properly configure your deal management application. Typically, applications provide hundreds of stock fields and layouts out of the box. While these are good starting points, they are just suggestions and probably aren’t all applicable to your firm.

Before you start “slashing and burning”, though, take some time to define your deal management process. What are the various stages and the corresponding workflows and tasks? What terminology does your firm use for pipeline statuses and other important metrics?

Once you’ve mapped out your process, you can begin configuring. Using the application’s Admin Site, remove fields that you aren’t going to use and that will otherwise bog down end-users. In addition, rename existing fields to coincide with your firm’s terminology. Tailor layouts and reorder fields to match the workflows you’ve outlined.

Some systems also have capabilities for creating Rules-Based Layouts that are displayed only when certain conditions are met. For instance, you might have specific layouts for tracking information on portfolio companies. Because they aren’t necessary for the pre-investment process, they can be kept hidden until the pipeline status is changed to “portfolio company”.

Before we move on, it’s important to note the difference between configuration and customization, as the two terms are often mistakenly used interchangeably. Through configuration, an application can be tailored or modified without creating or modifying software code. Customization requires code changes, and is thus a lengthier and more costly process that often leads to long-term maintenance issues.

9. Stay Connected on the Road

Because private equity professionals are frequently on the road, they need to be able to access deal and contact information from any location—and from multiple devices.

While client-server applications can be accessed remotely – your IT department would have to set up a remote desktop service – their performance tends to be slow in such environments. A much more effective solution is a deal management application that’s delivered via Software-as-a-Service (SaaS). Because SaaS applications require no software installation, they can be conveniently accessed from any computer with a browser and an Internet connection. Whether you’re using your business laptop, home computer, or a PC in the hotel business center, you’ll be able to log in and get work done.


Admin Site - The area of a deal management system where IT staff or power users can configure and maintain the application. Certain systems have a “sandbox”, where configuration changes can be previewed before they are published to end users.

Rules-Based Layouts - Layouts or information panels that are displayed only when certain conditions are met (e.g. the pipeline status of a deal is changed to “portfolio”).

Software-as-a-Service - A software delivery model where applications are hosted by the vendor and accessed by clients through a Web browser. Because SaaS applications don’t require installation, they can be accssed from any computer with a browser and Internet connection.

For situations where using a computer isn’t an option (e.g. in a cab on the way to an important meeting), your deal management system should have Mobile Apps for accessing information from your iPhone® or BlackBerry®, in addition to new tablet devices like the iPad®. You should be able to look up profiles and contact info, view and add activities, log calls and e-mails, and map addresses with the device’s built-in GPS. Depending on the mobile capabilities, you may also be able to run reports (e.g. deal profile, deal pipeline, etc.) and view documents.

10. Generate Capital Calls Quickly and Precisely

When a deal closes, your investor relations team is likely under a lot of pressure to send out capital call notices as quickly as possible.

Fortunately, certain deal management systems are part of a broader relationship management platform with capabilities for managing investor relations. These platforms typically have a Mail Merge Wizard for generating capital call letters and other correspondence. Mailing lists can be generated instantly by selecting the capital call recipients for a specific fund (using roles, as described in #2). Using saved templates, the letters can be quickly created and personalized with data, such as the contact name, fund name, and transactional data about the capital call.

Beyond the standard distribution channels (e.g. mail, e-mail, etc,), many systems have an integrated Investor Portal for posting fund and account information. Capital call letters and other correspondence created with the Mail Merge Wizard can be published directly to the secure portal for LPs to download. By minimizing mailings—and those dreaded envelope-stuffing parties—your firm can save significant time and money.



Since 1998, Netage Solutions, Inc. has been the premier provider of front-office solutions for the alternative assets industry, including private equity and venture capital firms, hedge funds, real estate investment firms, funds of funds, prime brokers, family offices, and institutional investors. Intuitive and highly configurable, the Dynamo™ Suite has improved the productivity of deal, research, and investor relations teams worldwide. Collectively, our clients manage over $400 billion in assets.


Mobile Apps - Extend the capabilities of a deal management system to asmartphone. Because users can easily view and edit information, they’re able to stay connected and work productively on the road.

Mail Merge Wizard - A tool for creating and distributingpersonalized correspondence. Investor relations teams use this feature to send capital call and distribution letters, as well as quarterly statements.

Investor Portal - A module ofcertain CRM platforms that allows you to post reports and correspondence to a secure portal. Portals save time and money by minimizing mailings.

To learn more about Netage’sdeal management solution,Dynamo™, please contact usat 1.866.439.6266 [email protected].

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10 Best Practices For Deal Flow Mgt