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Proprietary Deal Flow

Definition

Proprietary deal flow refers to acquisition opportunities that a buyer accesses exclusively or semi-exclusively, outside of a competitive auction process. These deals are often sourced through direct relationships with business owners, referrals from trusted intermediaries, or fireside chats arranged before a formal process launches.

Context

Proprietary deal access is the aspirational outcome of the relationship-building strategies discussed throughout Deal Sourcery. In Ep. 23, Chris Reilly describes the spectrum from broad auctions (wide distribution, many buyers) to narrow processes (selective, few buyers) to fireside chats (pre-process, most exclusive). Firms that earn proprietary access do so through sustained Reciprocal Relationship Building with boutique bankers and COIs.

In Ep. 20, Jake Colognesi describes how Mamba Growth pursues proprietary access to bootstrapped SaaS founders who aren't running processes. These companies "don't need to do anything" — they're profitable and not seeking capital — so proprietary access comes from value-first outreach and trust-building over time, not from intermediary relationships.

In Ep. 6, Dan Herr describes a deal attribution method for evaluating sourcing effectiveness: segment closed transactions and LOIs by "proprietary deals versus non-proprietary deals," then further break banked deals into fireside chats vs. broad auctions. Cross-referencing with relationship data reveals whether closed deals came from bankers the firm was actively covering — "if you're buying a lot of businesses that are with bankers you didn't have relationships with, clearly your banker coverage isn't going that well." (Ep. 6)

In Ep. 3, Dan Herr and Matt Rooney discuss the compensation premium firms place on proprietary sourcing. Firms with flat deal bonuses often pay a higher amount for a proprietary platform versus an intermediated one. Dan frames the economics through the Lehman fee: an external buy-side originator can earn ~1% of TEV for a truly proprietary deal, giving internal BD professionals a benchmark for evaluating their compensation relative to the value they create.

  • Deal Flow — proprietary deal flow is the highest-quality subset
  • Fireside Chat — the most exclusive form of early deal access
  • M&A Process Dynamics — covers the spectrum from auction to proprietary
  • Origination — the practice that generates proprietary access