Key takeaways
- Write the thesis as filters: sector, size band, region and ownership.
- Run intermediated and proprietary deal flow side by side.
- Contact the owner or founder first in a founder-led business.
- Send a cited research brief round the team before anyone makes contact.
- Origination is a long relationship, so keep notes that outlast the deal team.
What does private equity deal sourcing involve
Private equity deal sourcing is the work of finding companies that fit a fund's thesis and getting a conversation with the people who own them. It runs on two tracks that most firms keep going at once.
The intermediated track is the flow of opportunities from corporate finance advisers, brokers and banks, usually as a teaser and then a managed process with other bidders. The proprietary track is the firm's own outreach to owners who are not yet running a sale. Proprietary deal flow appeals because it gives the deal team time with an owner before a competitive process starts.
How to find acquisition targets for one thesis
You find acquisition targets by writing the thesis as a set of filters and building one list per thesis, never one list for the whole fund. A vague thesis such as "profitable B2B services" returns thousands of names; a narrow one returns a list a small team can know properly.
Headcount often stands in for size when revenue is not public, and the head office region tells you which partner is closest. Read the company's own site to confirm the fit before it goes on the list.
- Sector and sub-sector, in the words companies use to describe themselves
- Size band, by headcount where revenue is not published
- Head office country or region
- Ownership: founder-owned, family-owned, management-owned or a division of a group
- Reasons to exclude: an existing investor, a recent sale or a poor fit with the portfolio
Who should a deal team contact first
In a founder-led business the deal team contacts the founder or majority owner first, because nobody else can discuss a sale. In a management-led business the chief executive is the usual first contact, with the finance director close behind.
Each cares about different things. A founder thinks about the team, the legacy and the timing of their own exit. A finance director thinks about the process, the data room and the workload. For a carve-out, the first conversation is with corporate development at the parent company, not with the division.
How should proprietary outreach read
Proprietary outreach reads like an introduction from a patient investor, not a bid. Say why the company caught your attention, what kind of partner the fund is and that you would welcome a conversation about the owner's plans, with no expectation of a sale.
Keep it confidential and quiet. Write to the owner directly, never to a shared inbox, and never mention other targets or portfolio details. Sign a non-disclosure agreement before any figures change hands. Personal data about the people you contact falls under data protection law, and if a target or its parent is listed, market abuse rules on inside information apply to what you learn; confirm the detail with your compliance adviser.
How do you keep pe origination going between deals
Keep origination going by treating every owner conversation as the start of a long relationship and recording it where the whole team can see it. Owners who say "not now" often mean "not yet", and the next partner to call should know what was said.
Revisit each name when something changes: a founder steps back from the day to day, a new finance director arrives, the company appoints a corporate finance adviser, a competitor is acquired or a new set of accounts shows a change of direction.
How to source private equity deals, step by step
Repeat the steps for each investment thesis the fund runs.
- Write the thesis as filters: sector, size band, head office region, ownership and exclusions.
- Build a company list that matches the filters and check each company on its own website.
- Name the founder, chief executive and finance director at each company on the list.
- Prepare a short research brief with cited sources before anyone makes contact.
- Send a confidential, personal note from a partner and propose a conversation, not a deal.
- Record every reply and set a date to revisit the owners who are not ready.
Where Pebbles Ai fits
- CapabilityProspecting & customer recordsDescribe a thesis to an assistant and it searches for matching companies by keyword, industry, headcount and head office region, up to 50 a search. Find fresh leads then returns founders and finance directors at up to ten named companies from Pebbles Ai's own GDPR compliant B2B contact database.
- CapabilityResearch & analysisAsk for a research brief on a target from its website and other public sources, with numbered citations the deal team can check before the first call.
- FoundationAgent memoryKeep each thesis in its own project, so project memory holds the filters and exclusions for every chat about it.
Common questions
What is proprietary deal flow?
Proprietary deal flow is the set of opportunities a firm finds through its own relationships and outreach rather than through a sale process run by an adviser. It gives the firm time with an owner before other bidders arrive.
Do private equity firms send cold emails to founders?
Many do, but the good ones read like a personal introduction from a partner, not a campaign. Owners tend to give a short, specific and confidential note a better hearing than anything that looks sent in bulk.
How long does it take from first contact to a deal?
It varies widely. Some owners are ready within months; others talk to a fund for years before they sell, which is why the notes from every conversation matter.
Should a small private equity firm hire someone for origination?
A dedicated origination person helps once the fund runs more than one thesis at a time. Before that, partners usually cover it themselves, with shared lists and notes so no owner is contacted twice.
About this page. Written by the Pebbles Ai team for people who run sales, marketing and growth. Last updated .
