How to Win More M&A Deals with Half of Your Resources

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businessman shaking business woman's hand during merger deal

Next-generation deal-making for private equity, family offices, and lenders

No private equity investor ever changed the world — or amassed a fortune — by being one shark in a feeding frenzy. M&A fortunes and longevity are built on proprietary deals. In the long run, private investors who know how to build proprietary deal flow will win every time.

The Importance of Proprietary Deal Flow

The mid-sized M&A space is a “red ocean” — a feeding frenzy of blood in the water. Deals are shopped by investment banks to multiple investor groups. Competition is fierce, and whoever limps across the finish line is rewarded with a deal that has had all the meat picked off the bone.

True private equity Nirvana lies in proprietary deals deals outside of the feeding frenzy. With proprietary or “off-market” deals, a private equity firm is often the only investor in contention for the deal. Why? Because proprietary deals evolve from relationships with the founders.

These kinds of founder relationships don’t grow on trees. It takes a proactive origination strategy that generates better deal flow — a consistent and significant influx of relevant investment opportunities.

So how does a private equity firm, family office, corporate development/M&A group or direct lender create proprietary deal flow, especially if they don’t have the network and resources of one of the big players?

We live in exciting times — deal origination has never been easier. Even non-institutional private investors can create significant proprietary deal flow through a three-pronged approach:

  1. Referrals
  2. Technology
  3. Independent Sponsors

1. Referrals — The Art of Visible Expertise

Building your referral network is a form of inbound marketing — getting leads to come to you rather than going out and chasing them down. Establishing deal flow through referrals means building a differentiated brand and reputation. If entrepreneurs know that you have money to invest and expertise to contribute, they will come knocking.

A study by the Hinge Research Institute discovered that “traditional” referral sources — networking events, sponsorships, and direct requests — are not strong drivers of referral business.

Instead, the study identified the following key factors in an effective referral pipeline:

  • Visible Expertise. 37% of referrals studied owed their source to visible demonstrations of expertise — keynote addresses at conferences, publication of educational content, demonstrations of track record, etc.
  • Professional and Social Relationships. Another source of referrals came from the subjects’ relationships with other professionals, including social connections — that is, outside the workplace.
  • Reciprocation. Companies who liberally give referrals tend to get more referrals, with the top 20% of referral-giving subjects receiving 3x as many referrals as the other subjects.

The bottom line is this — “old-school” doesn’t mean “obsolete.” Proprietary deals are built on strong relationships, and nothing builds strong relationships like a strong referral network.

2. Technology – Take Control of Your Deal Flow

The kind of relationships that lead to proprietary deals may take three years or longer to nurture. Without careful cultivation of a large list of leads, it’s nearly impossible to manually create and manage a robust pipeline of proprietary deals.

This brings us to customer relationship management (CRM). CRM software goes hand-in-hand with referral marketing as well as outbound digital marketing — every new lead comes into the CRM.

You can integrate your CRM with every referral or inbound and outbound lead source — email, WhatsApp, social media, automated transcripts, data-scraping apps, and much more — so that all your leads land in one centralized place.

You can then use other integrations to leverage the most powerful resource a 21st-century company can access — data. Successful companies, including big players in private equity, use data-driven decision-making to stay ahead of the pack.

If this all sounds like a lot, here is just a brief selection of things a well-integrated CRM can do for a private company investor …

  • Integrate with data-scrapers to pull targeted leads into your CRM directly from LinkedIn — all with the press of a button.
  • Target decision makers by geography, industry, and company size, as well as monitor liquidity indicators like acceleration in an organization’s size.
  • Track each lead’s interaction — which of your web pages and profiles they have visited, for how long, and how many “touches” they have received — and automatically assign them a “temperature” or “lead” score, so you know who is primed for the close.
  • Execute “workflows” — every new lead that enters the CRM gets an automated sequence of interactions (email, text, etc.) to nurture the relationship and keep your firm “top-of-mind.”

None of this is a substitute for direct relationships. Eventually, you will have to reach out to your contacts to nurture the relationship in person.

But a well-integrated CRM ensures that fewer leads fall through the cracks. It also enables you to accelerate the nurturing of those relationships and focus your time on the most likely prospects for proprietary deals.

3. Independent Sponsors – Shorten Your Sales Cycle

Independent sponsors are a relatively new quantity in the private equity space, but their footprint is growing. Formerly referred to as “fundless sponsors,” they are deal sponsors unaffiliated with a set fund. Instead, independent sponsors find the proprietary deal for you.

They identify opportunities — usually middle- or lower-middle-market opportunities — and then raise capital to fund those opportunities from their network of private investors.

Raise the funds from whom? From private investors within the independent sponsor’s network. Ergo — networking with independent sponsors can afford private company investors access to deals that would otherwise be off-limits to them.

The more independent sponsors know you and know you are looking for deals, the more deals they will send you. The independent sponsor does the legwork; the capital provider only invests if they like what they bring.


Proprietary deal flow is the key to long-term success in the arena of private investing. Cap Expand Partners assists organizations in rapidly expanding their horizons through increased access to off-market deals. If you are an investor, fund manager, or family office representative serious about expanding your proprietary deal flow, schedule an exploratory call to discuss your options.

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