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Deal Flow

Definition

Deal flow is a term used by finance professionals such as venture capitalists, angel investors, private equity investors and investment bankers to refer to the rate at which they receive business proposals/investment offers. The term is also used not as a measure of rate, but simply to refer to the stream of offers or opportunities as a collective whole. An organization's deal flow is considered "good" if it results in enough revenue- or equity-generating opportunities to keep the organization functioning at peak capacity.

What is 'Deal Flow'

The rate at which business proposals and investment pitches are being received by financiers such as investment bankers and venture capitalists. Rather than a rigid quantitative measure, the rate of deal flow is somewhat qualitative and is meant to provide an indication of whether business is good or bad. The state of the economy has a significant influence on the level of deal flow. Economic expansion and robust equity markets will usually generate healthy deal flow for most financiers, while a recession and/or sluggish equity markets may generate some deal flow for only the most established players.

Explaining 'Deal Flow'

Deal flow can comprise many different types of proposals: venture funding, private placements, syndications, initial public offerings (IPO), mergers and acquisitions. While large investment banks can handle most of these activities, specialist financiers such as venture capitalists and angel investors will generally focus on deal flow only in their area of expertise.


Further Reading


The impact of all-star analyst job changes on their coverage choices and investment banking deal flow
www.sciencedirect.com [PDF]
Using a sample of all-star analysts who switch investment banks, we examine (1) whether analyst behavior is influenced by banking relationships and (2) whether analyst behavior affects investment banking deal flow. Although the stock coverage decision depends on the …

The practice of the life science venture capital industry: compensation, deal flow, and contractsThe practice of the life science venture capital industry: compensation, deal flow, and contracts
jpe.pm-research.com [PDF]
Using a sample of all-star analysts who switch investment banks, we examine (1) whether analyst behavior is influenced by banking relationships and (2) whether analyst behavior affects investment banking deal flow. Although the stock coverage decision depends on the …

What drives capital flows? The case of cross-border M&A activity and financial deepeningWhat drives capital flows? The case of cross-border M&A activity and financial deepening
www.sciencedirect.com [PDF]
Using a sample of all-star analysts who switch investment banks, we examine (1) whether analyst behavior is influenced by banking relationships and (2) whether analyst behavior affects investment banking deal flow. Although the stock coverage decision depends on the …

Real options in practice: an exploratory survey of how finance officers deal with flexibility in capital appraisalReal options in practice: an exploratory survey of how finance officers deal with flexibility in capital appraisal
www.sciencedirect.com [PDF]
Using a sample of all-star analysts who switch investment banks, we examine (1) whether analyst behavior is influenced by banking relationships and (2) whether analyst behavior affects investment banking deal flow. Although the stock coverage decision depends on the …

Finance-dominated capitalism in crisis—the case for a global Keynesian New DealFinance-dominated capitalism in crisis—the case for a global Keynesian New Deal
www.tandfonline.com [PDF]
Using a sample of all-star analysts who switch investment banks, we examine (1) whether analyst behavior is influenced by banking relationships and (2) whether analyst behavior affects investment banking deal flow. Although the stock coverage decision depends on the …

Project financing: Deal or no dealProject financing: Deal or no deal
www.sciencedirect.com [PDF]
Using a sample of all-star analysts who switch investment banks, we examine (1) whether analyst behavior is influenced by banking relationships and (2) whether analyst behavior affects investment banking deal flow. Although the stock coverage decision depends on the …



Q&A About Deal Flow


What types of deals can be included in deal flow?

Venture funding, private placements, syndications, initial public offerings (IPO), mergers and acquisitions.

How does deal flow relate to the economy?

The state of the economy has a significant influence on deal flow.

What is deal flow?

Deal flow is the rate at which business proposals and investment pitches are being received by financiers.

Who handles most different types of deals?

Large investment banks handle most different types of deals.

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