M&A Deal Sourcing: How to Build Proprietary Deal Flow Instead of Waiting for the Auction.
Most firms see deals when a banker sends the teaser, along with everyone else on the buyer list. This guide covers how M&A advisors, private equity firms, search funds and business brokers source deals today, what the data says about each channel, why most owner outreach gets ignored, and how to build deal origination you control.
The Short Answer
What is deal sourcing, and how do firms do it?
Deal sourcing, also called deal origination, is how an acquirer or advisor finds companies that might transact before or outside a competitive process. Firms do it through intermediaries running auctions, referral networks of accountants, attorneys and wealth advisors, conferences, deal platforms and databases, and direct outreach to owners. Coverage is thin even for well-funded buyers: Sutton Place Strategies, a Bain & Company business, found the average private equity firm saw only 18.4% of the deal flow in its own target market in the twelve months to June 2025 (177 firms). Proprietary deal flow comes from the one channel the firm controls, which is direct, sustained contact with owners who have not hired an advisor yet.
of the deal flow in its own target market reaches the average private equity firm
Sutton Place Strategies (Bain), 177 firms, LTM June 2025
of sellers had done no formal exit planning before going to market
Pepperdine Private Capital Markets Report, 2026
median time for a search fund to go from starting the search to closing an acquisition
Stanford GSB Search Fund Study, 2024
The Channels
Deal Sourcing Strategies, Compared
There are six ways a firm originates lower-middle-market deals. Most firms depend on the first two and treat the last as something to get to later.
| Channel | What the Data Says | Where It Breaks |
|---|---|---|
| Intermediated processes and auctions | Sell-side bankers and business brokers market the company to a curated buyer list with a teaser, then a CIM under NDA. Sponsor-backed lower-middle-market deals averaged 7.2x EBITDA in 2025 for the third year running (GF Data). | Everyone on the list sees the same deal at the same time, and the process exists to maximize price. The average PE firm still sees only 18.4% of its market this way and every other way combined (SPS, 2025). |
| Referral networks | CPAs, M&A attorneys, wealth advisors and commercial bankers often hear an owner's intentions first. | Only 26% of sellers had met with an advisor before going to market (Pepperdine, 2026). Most owners have no one to refer them, and you can't turn a referral source up. |
| Conferences and associations | ACG chapters and DealMAX, AM&AA, IBBA and M&A Source events are where the intermediary community meets. | The same firms work the same rooms. It builds relationships with other deal people, not with owners. |
| Deal platforms and databases | Axial, Grata, SourceScrub and PitchBook make private companies searchable and connect buyers with sellers and intermediaries. | Your competitors subscribe to the same data. A platform gives you a list. It does not give you a conversation. |
| Inbound content and reputation | Compounds over years and brings owners who have already decided to explore a sale. | Slow, and it only reaches owners who are already looking. By then they are usually talking to several firms. |
| Direct owner outreach | The only channel that produces a conversation before a process exists. Search funds rely on it heavily, and the median search takes about 20 months (Stanford GSB, 2024). | Owners receive stacks of identical letters. Done generically it is noise, and the payoff is measured in years. |
The Owner
Who Sells a Business, and What Triggers It
Retirement drives most sales. In the IBBA and M&A Source Market Pulse for the second quarter of 2026, retirement was the leading reason for selling in every deal-size band, at 45% to 72% of sales. On Main Street, burnout, health and new opportunities each accounted for 14% to 17%.
The pool is large. Project Equity, a nonprofit that compiles ownership data, counts 2.9 million US businesses owned by people aged 55 or older, employing 32.1 million people.
Most of those owners are not prepared. The Exit Planning Institute's 2023 State of Owner Readiness report found 32% of owners have a documented exit plan. In 2013, 83% had none, so the direction is right and the majority is still unprepared. Pepperdine's 2026 report found 64% of sellers had done no formal exit planning before going to market, and only 26% had met with an advisor beforehand. In the second quarter of 2026, 60% to 90% of sellers in the Market Pulse survey had less than a year of planning or none.
That is the opening for outbound. The typical owner you reach has no banker, no plan and no process, and will still make this decision within a few years. Whoever they already know when the day comes has the advantage.
Expect a long road after the first conversation. Lower-middle-market deals now take 11 to 12 months from engagement to close, and Main Street deals 6 to 10 months (IBBA and M&A Source, Q2 2026). Pepperdine's bankers report that roughly one in three engagements does not close, most often because of a valuation gap of 11% to 20% between buyer and seller.
Why It Fails
Why Most Owner Outreach Gets Ignored
It Is the Same Letter Everyone Sends
"We have a buyer interested in companies like yours." Owners in any attractive industry have seen it many times. Nothing in it shows the sender knows anything about their company.
The Claim Isn't True
If there is no specific buyer, saying there is one is a problem beyond credibility. The FTC's standard is that a company must have a reasonable basis for a claim before it makes it, and registered representatives are bound by FINRA's rule against exaggerated or unwarranted claims.
The List Is an Industry Code
Every company in a category and a revenue band is a universe, not a list. The owners worth contacting are the ones showing signs of a coming transition, and those signs are usually in public records.
It Stops After One Quarter
Owners sell on their own timeline. A campaign that runs for ninety days and ends reaches people years before they decide, then disappears. The median search fund takes about 20 months to close one acquisition.
The Contact Data Is Wrong
Private company data is thin. Owner names, direct lines and accurate revenue are not published anywhere central, which is why a whole category of sourcing software exists. Unverified data means bounced email and calls to a front desk.
It Asks for Too Much
An owner who has never thought seriously about selling will not book a valuation meeting with a stranger. A short, confidential conversation about what companies like theirs are trading for is a smaller step.
The Fix
How to Build Proprietary Deal Flow Through Direct Outreach
Define the Box Precisely
Industry, geography, revenue or EBITDA range, ownership type. For a buy-side mandate, the exact criteria the buyer will actually close on. Vague criteria produce meetings nobody wants.
Filter for Intent, Not Just Fit
Length of ownership, founder age where it is public, no visible successor, an absentee or semi-retired owner, a partner's departure, consolidation happening in their industry. Each is a weak signal. Stacked, they turn a low base rate into a list worth working.
Get the Owner's Real Contact Details
The owner, not info@ and not the front desk. Verified email, a direct line and, for many owner-operators, a mailing address.
Lead With Something Specific to Their Company
What you know about their business, their market and what comparable companies have traded for. Be plain about who you are and who you represent. Promise confidentiality and mean it.
Run Email, Phone and Mail Together, for Years
Owner-operators in the field answer a phone before they read an inbox, and a letter still gets opened. A positive reply gets a call within minutes. Everyone else stays on a light, useful touch every few months until their timing changes.
Work the Referral Sources in Parallel
A separate campaign to the CPAs, attorneys and wealth advisors who serve owners in your box. They sit at a desk, read email and have a reason to know a credible buyer or advisor before their client asks.
Define a Qualified Conversation in Writing
The actual owner or a controlling shareholder, a company inside the box, a genuine willingness to discuss options, and they showed up. Agreed before anything sends.
This is the method behind our own results, which came from sourcing sellers, not from selling software. Our case studies cover four commercial real estate sales totaling $11.5 million, each sourced from a cold list in a market where one to two percent of properties trade in a year. Public record, a filter that reads as intent rather than demographics, and direct multichannel outreach. TektonScale runs that system for deal firms, done for you.
The Math
What One Sourced Deal Is Worth
For an advisor, work it out from your own fee schedule. The 2024 M&A Fee Guide from Firmex, Axial and Divestopedia found 44% of advisors use the Lehman formula for success fees and that the most common monthly retainer is $5,000 to $10,000, reported by 49% of respondents. One closed engagement in the lower middle market pays for a long stretch of origination.
For a buyer, a proprietary deal is worth the difference between a negotiated price and an auction price, plus the deals you would never have seen. Market multiples set the scale: 7.2x EBITDA for sponsor-backed lower-middle-market deals in 2025 (GF Data), 5.8x for the $5 million to $50 million band in the second quarter of 2026, the highest since early 2022 (IBBA and M&A Source), and a median search fund purchase price of $16 million in 2024 and 2025 (Stanford GSB).
Then be honest about the funnel. Most conversations go nowhere for a long time, about a third of signed engagements never close, and the ones that do take most of a year. Origination is a standing cost of being in this business, not a campaign.
The Rules
Rules That Apply to Deal Sourcing Outreach
This describes the rules. It is not legal advice, and this area changes. Check with counsel before you scale.
FAQ
M&A Deal Sourcing: Common Questions
Finding and opening conversations with companies that could be acquired, or with owners who could become sell-side clients. It is also called deal origination. It covers intermediated deal flow from bankers and brokers, referrals, platforms and databases, and direct outreach to owners.
Deals you see before or outside a competitive process, usually because you built the relationship with the owner directly. It matters because auctions are run to maximize price and put every buyer on equal footing.
Through intermediary coverage, conferences, sourcing platforms and their own business development teams calling owners. Even so, Sutton Place Strategies found the average firm saw only 18.4% of the deal flow in its own target market in the year to June 2025. Direct outreach is how firms try to close that gap.
Mostly by contacting owners directly, at volume, for a long time. Stanford's 2024 Search Fund Study puts the median time from starting a search to closing an acquisition at about 20 months, and 58% of search funds since 1996 have completed an acquisition.
Referrals from accountants, attorneys and wealth advisors, reputation in an industry or region, and direct outreach to owners. Since only 26% of sellers had met an advisor before going to market (Pepperdine, 2026), most owners are not yet anyone's client.
It works as one part of a sequence that includes the phone and often mail, aimed at a filtered list, with a first line specific to the company. No published study measures response rates for owner outreach, so be wary of anyone quoting you one. Owners in the field are often easier to reach by phone than by email.
Longer than most firms plan for. Owners decide on their own timeline, engaged lower-middle-market sales take 11 to 12 months to close, and roughly a third of engagements don't close at all. Treat origination as a permanent function.
A conversation with the actual owner or a controlling shareholder of a company inside your criteria, who is genuinely open to discussing options, and who showed up. We agree the exact definition in writing before a campaign starts.
Free Market Sizing
Find Out If Your Market Is Big Enough Before You Spend a Dollar.
Most outbound fails before the first email is sent, because nobody checked whether the market could support the volume. So we check first.
Tell us who you sell to and what a closed customer is worth. We size the market and show you the list we would actually work, whether or not we end up working together.
Book Your Free Market SizingOne 30-minute call. You keep the numbers either way.
What you get:
About
Built by Someone Who Has Done This at Scale
Matt Dittmeier
Founder, TektonScale
My name is Matt Dittmeier. I have personally closed over $100 million in investment sales strictly through cold outbound — no warm referrals, no inbound, no paid advertising. Just a dialed-in system, a targeted list, and a proven process.
I have run outbound teams at Marcus & Millichap, one of the largest commercial real estate investment brokerage firms in the country, and at TrueRate, a national investment sales platform focused on middle-market to institutional-level transactions under a 1B+ AUM sponsor.
Today, that same system books over 100 qualified meetings every month for one of New York City's top investment sales teams, through cold outbound alone — generating over $250M in annual aggregate sales volume. This is not a theory. It is a live, operating result.
Ready to Fill Your Calendar?
Book Your Free Strategy Call
In 30 minutes, we'll map out exactly what a cold outbound system would look like for your offer and your market — whether we work together or not.
No pitch. No pressure. If it's a fit, we'll tell you. If it's not, we'll tell you that too.
Come with one number: roughly what a closed customer is worth to you. That figure decides everything else, and it's the first thing we'll ask.
Book Your Free Strategy CallWe only take on a limited number of new clients per month to maintain quality.
Sources
- Sutton Place Strategies (a Bain & Company business), Deal Origination Benchmark Report, LTM 2025, 17 October 2025 (177 PE firms)
- Stanford Graduate School of Business, Search Fund Study, 2024
- Pepperdine Graziadio Business School, Private Capital Markets Report, 2026 (500+ respondents)
- IBBA and M&A Source, Market Pulse Report, second quarter 2026
- GF Data, lower-middle-market valuation reports, 2025 and first quarter 2026
- Exit Planning Institute, National State of Owner Readiness Report, 2023
- Project Equity, small business ownership succession data
- Firmex, Axial and Divestopedia, M&A Fee Guide, 2024
- Securities Exchange Act of 1934, Section 15(b)(13), effective 29 March 2023
- FINRA Rule 2210, Communications with the Public
- Federal Trade Commission: CAN-SPAM compliance guide; Telemarketing Sales Rule guidance and 2024 amendments; advertising substantiation guidance
- Chennette v. Porch.com, US Court of Appeals for the Ninth Circuit, 2022
- Ahrefs keyword data, United States, September 2026
- TektonScale case studies