Financial Sponsor Bankers Ideal Profile for Private Equity Business Development?

Are Sponsor Bankers the best profile for private equity BD roles?

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There aren't as many out there as I would have guessed (less than 1% of all dedicated BD professionals). It’s a surprisingly low percentage, particularly because the background seems so well-aligned for the PE BD role.

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As always, it depends on the firm’s strategy, but the overlap in experience between financial sponsors bankers and Business Development roles in Private Equity is hard to ignore. In many ways, it's like looking at the same job but from opposite ends of the lens. Sponsor bankers already serve as relationship managers, acting as the vital connective tissue between industry bankers and PE clients.

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Likewise, BD professionals in PE are at the epicenter of all inbound deal flow, primarily through these very same banking relationships.

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Digging one layer deeper reveals an even more compelling case - sponsor bankers bring their nuanced understanding of the inner workings within the banks. They know how banks prioritize their PE sponsors, who gets what kind of deal, and the politics that shape these decisions. This kind of nuanced understanding can serve as a strategic advantage when they take a seat in a PE firm's BD role.

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And sure, it might just be about who generates the most fees when it comes to priority in deal flow. But when the playing field is level, relationships can be the deciding factor. Sponsor bankers should have those relationships from their prior bank at the very least and they should also understand the subtleties of maintaining these same relationships across the street, having been in the seat themselves.

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Another upside? Sponsor bankers typically have deal execution experience. Whether they've handled financing in-house or gained prior experience from a product or coverage group, they can add substance to conversations with bankers.

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While it may be stating the obvious and it certainly depends on the PE firm and their strategy (i.e. if very focused on proprietary deal flow, nuanced understanding of the inner workings of investment banks is not as valuable), sponsor bankers are a great fit for BD roles at PE firms.

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If you're a new or existing firm considering adding a dedicated BD professional and want to discuss this profile, don't hesitate to reach out!