Anyone have Experience Using Proprietary Deal Sourcing Agencies

September 02, 2024

by a searcher from Northwestern University - Kellogg School of Management in Antioch, CA, USA

As someone new to the search space and a solo search I'm interested in learning from others about their experience using 3rd party companies to source deals for them. To clarify I don't mean platforms like axial, or independent buy side brokers, but rather companies like Kairo Data that have a seemingly end to end model where they have a platform with deals listed and then a stated support process where they will source proprietary deals on your behalf. There seems to be a lot of 3rd party business launching to aide searches source deals but not a lot of information or reviews on these types of companies or the overall effectiveness in improving a searches success with proprietary deals. Have others had experiences with companies like this. Would love to connect and learn about your experience if so. Thanks

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Reply by a searcher
from University of Massachusetts at Lowell in Cincinnati, OH, USA

I've used deal sourcing aggregators in the past and have found that a lot of them have deals that you can find on your own if you just google local brokerages and drill down into their websites. I think the sites I've dealt with charged like 300 a month just for scraped data that they got off the internet. I didn't have much success with this and found the monthly subscription cost to be not worth the service.

I also paid a brokerage firm to do a search for me last year to find a manufacturing business that didn't yield any positive results. Cost was a lot, and they would also get a percentage brokerage fee for any deal you get across the finish line.

I would say that the thing that ended up working best for me was just doing outreach to brokers, bankers, M&A advisors directly in the regions I was interested in. Networking with them and setting up alerts on Bizbuysell ended up bringing me more leads than a dedicated search did and it cost me almost nothing.

My advice: spend the time to professionalize your processes instead, set up a business email, an website that has your CV and outlines your investment thesis and buy criteria, and then just get out there and start networking with people here on search funder and your Local and online ETA groups.

Then finally its a numbers game. If you have a buy box well defined and your not looking an analyzing a deal or 2 or more a week, it will take a long time to find your deal. You will end up getting frustrated and losing momentum. You got to analyze 100 deals to get to 1-2 businesses where you get it under LOI, and even then you might not get a deal done.

Happy to chat if you have any other questions

Reply by a professional
from Boston University in İstanbul, Türkiye

Thanks for mentioning me, Luke! Having worked as an analyst at Search Fund Accelerator and as a consultant at Deloitte, I’ve seen how crucial it is to have tailored support when sourcing and evaluating proprietary deals. At Search Fund Plus, we provide tailored solutions for searchers, designed to streamline the process with our expert analyst team and infrastructure. Feel free to reach out if you’d like to learn more or if you'd like to explore the possibility of connecting with a current client for their perspective.

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