How do deal aggregators work

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Urs Haeusler, CEO of Deal Market, wants to create “its own ecosystem for the PE industry” and supply the entire midmarket in private equity. The platform makes three essential offers to the community. Firstly, it offers a marketplace for PE deals, comparable to Immoscout. Second, it offers a CRM tool to better manage transactions that works on a SaaS (Software-as-a-Service) basis. Finally, Deal Market offers an online shop for the purchase of community-related information such as database extracts and rating multiples for individual sales.
Unlike in the industry, the financing model is not geared towards transaction commissions. Rather, the platform charges usage-related fees for placing deals, usage fees for the software and earns commissions as a reseller for the individual sale of services in the Deal Market Store.

Market transparency in PE should increase

The main promise that Haeusler makes to the PE community is the gain in transparency. “Most PE houses or M&A consultants only look for sellers within their own network, but have difficulties expanding the network worldwide,” says the Swiss economist, who has been at the helm of the 16-man company in Zurich since February 2012. In addition, one can look for investors who are not public.
It is rather unlikely that medium-sized companies looking for equity will put their company in the shop window themselves, even if advertisements are possible in half-ciphered form, for example: “Kitchen builder from German-speaking countries is looking for an investor.” Banks the companies on the platform. The most common deal variants within the PE community are currently secondary and tertiary deals.

Cost pressure in the private equity business

The platform benefits from the increased cost pressure in the industry. The platform makes it possible to dispense with one or more of the intermediaries usually interposed. This endangers existing benefices of M&A advisors on the buy and sell side - certainly not of the legal adviser. In general, consultant fees are likely to come under pressure if platforms such as Deal Market prevail.

According to the platform itself, more than 1,000 transactions have already been processed via Deal Market. The platform refers to some well-known customers within larger PE houses and family offices. However, a counter-research by FINANCE at the aforementioned houses revealed that the platform was not well known.

The big question for the success of the platform will be whether the people business private equity, which is based on personal networks and references, may move to the anonymous online "dating agency" without a track record. After starting in Switzerland, Deal Market is now also going on the market in Germany.

marc-christian.ollrog [at] finance-magazin.de