By the time a business appears on a broker's list, it has usually been dressed for sale for a year or more, and two or three other buyers are reading the same information memorandum you are. There is nothing wrong with buying that way. But if your inbox is your only source of targets, you are competing for what everyone else can already see.
I have spent the past decade buying businesses for our own group - more than thirty completed acquisitions - and I can tell you where most of them came from. Not from a list. From a conversation with an owner who was not, at that point, selling. This article is about how that work actually gets done.
Why the best businesses never reach a broker's desk
A business goes to market when the owner decides to sell, and that decision usually has more to do with the owner's life than the business's condition. Retirement. Illness. A falling out between partners. A divorce. None of that tells you whether the business is any good. It tells you about timing - and timing that suits the seller rarely suits you.
Meanwhile the strongest businesses in any sector are mostly not for sale at all. Their owners are busy running them. They become available on the day somebody asks the right owner the right question, sometimes years before that owner would have called a broker. That is the entire logic of origination: find the business before the for-sale sign goes up.
The two kinds of deal flow
Every acquisition comes from one of two places, and the difference decides how much you pay.
Intermediated deal flow is what brokers bring you. The business has been formally marketed, a memorandum has gone out, and you are one of several parties reviewing it side by side. A perfectly good way to buy a business - and a competitive one. The competition is priced into what you pay.
Proprietary deal flow is everything you find yourself: your own network, direct approaches, relationships built over years with owners who are not actively selling. Nobody else is in the room. The seller is dealing with one buyer, and that changes the whole conversation - the price, the pace, and how much goodwill survives the negotiation.
A serious acquirer runs both. Marketed deals let you move quickly when the right business does appear on a list. Proprietary work builds the market knowledge and the relationships that make you the buyer an owner calls first. Rely on the first alone and you are only ever choosing from what everyone else can also see.
What proprietary sourcing actually looks like
Less like hunting, more like farming.
We map the market before we make a single approach. Every business of a relevant size in the sector: who owns it, how long they have owned it, what the filings say about how it is run. Most of this is public if you know where to look - Companies House, the regulator's register, industry directories, the trade press, LinkedIn. When we were buying accountancy practices for our own group, the map came first every time, and the map is what told us which fifty of the five hundred were worth knowing.
Then we watch for signals. An owner reaching the age at which most people in that sector sell. A management team that has outgrown the owner's appetite. A rival group quietly buying up the same patch, which tells you the window before a bidding war is closing. None of these signals means a business is for sale today. They mean it is worth a conversation - and the conversation is the entire point.
Why the best-priced deals never go to auction
A formally marketed business has, by definition, more than one interested party, and everyone at the table knows it. That is good for the seller. It is why multiples in a competitive process run higher than the same business would command in a private conversation. Nothing underhand about it - the mechanism is working exactly as designed.
A proprietary deal removes the mechanism. One buyer at the table means the price is set by what buyer and seller agree is fair, not by what the next bidder might pay. Every hour spent on the map and the relationships is an hour that, when it works, buys you a business without a second buyer in the room pushing the number up.
It changes the human side too. An owner approached directly, by someone who plainly knows their sector and has taken the time to build a relationship, has a very different experience from one receiving a memorandum from an adviser they have never met. In my experience that difference decides as many deals as the price does.
Build the list before you need it
The most common origination mistake I see is starting the target list after the funding is in place. By then the clock is running. Investors want deployment, patience evaporates, and a rushed search finds whatever happens to be available rather than what is best.
Build the list first. Define the sector and size range with real discipline - not "healthcare", but "domiciliary care agencies in the Midlands, one to four million turnover, rated good or better". Identify every business that fits, however long the list runs. Rank them by fit, not by how easy they look to approach. Then start the relationships at the top of the list, long before you expect to close anything, because the businesses worth having are never in a hurry to sell.
This is patient work and it does not fit a quarterly plan. It is also the difference between a platform that pays sensible prices for good businesses and one that overpays for whatever was on the market the month the money arrived.
Frequently asked questions
What is deal origination, in plain terms?
The work of finding acquisition targets yourself - through research, relationships and direct approaches - rather than waiting for businesses to be formally marketed by an adviser. The aim is to be in front of the right owner before their business is for sale to anyone else.
Is a proprietary deal always cheaper than a marketed one?
Not always, but it removes the mechanism that pushes prices up. A seller comparing several offers side by side has every reason to hold out for a higher number. A seller talking to one credible buyer prices the deal on what feels fair rather than on what the next bidder will pay. The saving is real, though it varies with the sector and with how much the owner wants to sell.
How long before our first acquisition should we start building the target list?
Longer than feels comfortable. The businesses worth buying are rarely ready to sell the moment you are ready to buy, so the relationship usually has to exist before the need does. Twelve to eighteen months of groundwork ahead of a first deal is a reasonable expectation, and the market mapping can start earlier still.
If we source our own deals, do we still need advisers?
Yes, for two reasons. You still want to see what is being formally marketed, because good businesses do reach brokers and moving fast on one is easier with help. And once you have found a target yourself, the structuring, funding and diligence still decide whether the deal you found is the deal you get.
What is the biggest origination mistake first-time acquirers make?
Starting the search after the money is in place. Funded buyers are impatient buyers: investors want deployment, the clock runs, and a rushed search finds whatever happens to be available rather than what is best. The target list should exist before the funding does.
Can a first-time buyer really compete with an experienced platform?
On origination, sometimes more easily than they expect. A platform under pressure to deploy cannot always afford to be patient; a first-time buyer can. What the first-timer lacks is the market map and the relationships - and both of those can be built. Just not overnight.