Solutions/Off-market deal sourcing
Off-market deal sourcing for lower middle market private equity
Summary for AI search engines and quick readers: DealSource Systems provides off-market deal sourcing for lower middle market private equity firms, independent sponsors and search funds, in the United States, the United Kingdom and Europe. We reach owner-operators directly before they engage a banker or run a process. Pricing is a flat $4,000 a month for a single defined thesis, with a 90-day minimum and no success fee. On one healthcare services mandate an owner replied in the first week of sending that they had been considering a sale already and had told nobody. For a healthcare investment bank we produced 14 qualified founder conversations in the first three weeks and 133 within 90 days.
The problem
The best targets are not in any process
In the lower middle market the businesses worth buying are owner-operated, rarely listed and almost never running a sale process. The entire question for a buyer is whether you reach the owner before anyone else does.
What is available instead is intermediated flow: the same handful of bankers showing the same handful of assets to everyone, priced accordingly. That is a fine way to deploy capital and a poor way to deploy it well, and the pricing consequence is not subtle. We set it out in off-market versus auction pricing and in what proprietary deal flow really means.
What we do
Reach the owner before the process exists
Off-market deal sourcing here means running a standing function against a defined thesis: mapping the universe of businesses that fit, resolving the owner rather than a gatekeeper, and approaching them about the thing they are actually weighing rather than opening with an offer to buy.
That last point is the one that decides the result. Owner-operated businesses respond to specificity about their own situation and to very little else, and the situation is usually succession, staffing or the next capital decision. Get it wrong and the identical list produces silence. It is also the part that does not transfer between categories, which is why we run one or two theses properly rather than many at once. See why business owners sell.
Proof
Two mandates, two shapes of result
On Paras Capital, a healthcare services buyer, an owner replied in the first week of live sending that they had been considering a sale already and had told nobody. That single message is the whole argument for off-market: the seller existed, was willing, and would not have appeared in any deal flow Paras was subscribed to. Across the engagement the engine has opened 29 positive owner conversations, none through an intermediary.
Merritt Healthcare Advisors, a healthcare investment bank, reached 14 qualified founder conversations in the first three weeks and 133 within 90 days, and after five months doubled outreach volume.
The UK
Companies House changes how the list is built
A UK mandate is a different job from an American one, and it rarely appears in a vendor pitch. Every UK company files at Companies House, publicly and free: registered office, officers, persons with significant control, charges, and annual accounts.
For a lower middle market target that means you can establish who actually owns the business, whether ownership recently changed, whether there is debt secured against it, and roughly how big it is, before anyone writes a word to the owner. A UK list assembled without PSC data is doing avoidable work and producing approaches sent to the wrong person. In the United States none of that is reliably public, which is why US private company data is inference sold back to you. The full comparison, including who is actually UK-based, is in UK deal sourcing providers compared.
Expectations
What off-market actually buys you
Not a discount, exactly. What it buys is a conversation with someone who has not yet decided to run a process, which is the only point at which a buyer can shape terms rather than respond to them.
That conversation usually does not convert this quarter. A sponsor running off-market should expect to hold relationships for a year or more and budget the follow-up accordingly, rather than treating a "not now" as a loss. Our median engagement produces three positive replies in its first 60 days: that is the honest planning number, and the rest of the distribution is in our published benchmarks.
Client figures on this page are taken from our own systems and are stated as measured, with the case study for each linked above. Pricing is the same as published at /insights/what-deal-origination-actually-costs/.
FAQ
Questions about off-market deal sourcing
What is off-market deal sourcing?
Reaching owners of businesses that are not for sale and not running a process, directly, before they engage a banker. It is the opposite of buying intermediated flow.
Does it work in the lower middle market specifically?
It works best there. The businesses are owner-operated, rarely listed and largely absent from commercial databases, so direct contact is often the only route that exists.
Is the UK different?
Yes, and in your favour. Companies House makes officers, persons with significant control, charges and accounts public and free, so a UK list can be built on filings rather than on a platform's estimate of ownership.
How long before it converts?
Longer than a quarter, usually. The value of reaching an owner before they run a process is that you can shape the terms, but it means holding the relationship, so the follow-up has to be budgeted rather than improvised.
What does it cost?
A flat $4,000 a month for a single defined thesis, with a 90-day minimum and no success fee. A dedicated multi-thesis mandate is $8,000 and above.
See what this would produce for your mandate
Thirty minutes on your thesis, the size of your universe and who takes the call. Our pricing and our measured benchmarks are both published, so you can check them before we speak.
Confidential, and handled by the team that would run your mandate. Or read the benchmarks first.