When owners begin looking for acquisitions, they often wait for opportunities to appear: an adviser sends a teaser, a competitor announces a process, a contact mentions a business for sale. Those opportunities are real, but they come with competition. Several buyers see the same information, prices rise, and the seller's adviser controls the timeline.
Many of the best acquisitions happen differently. The buyer identifies a company that fits, builds a relationship with its owner, and a transaction emerges over time, sometimes years later. This is proprietary deal sourcing, and it suits owner-led companies particularly well.
Why proprietary deals can be better
- Fit comes first. You choose the company based on your strategy rather than what happens to be available.
- Less competition. Without a formal auction, price discussions are often more measured.
- Better information. A relationship built over time reveals far more than a sales document.
- Smoother transition. Sellers who chose you are more invested in the outcome.
None of this guarantees a lower price. Owners who sell outside a formal process still expect fair value, and they should receive it. But the conversation tends to be about more than price.
Step 1: Build a map, not a list
Start by mapping your market systematically. Identify companies that match your criteria by size, location, capability and customer base. Useful sources include industry associations, trade fairs, supplier and customer networks, public company registers and your own team's knowledge.
For each company, capture:
- What they do and how they fit
- Ownership and the likely age or stage of the owner
- Signs of succession questions, such as no obvious next generation
- Relationships your team already has with them
Step 2: Prioritise
Not every company on the map deserves the same attention. Rank them on strategic fit, likelihood of an ownership change in the coming years and accessibility. Focus your energy on a manageable number of high-priority companies.
Step 3: Make the first approach thoughtfully
The first contact sets the tone. Owners of established companies receive many unsolicited approaches, most of them generic. What stands out is a personal, specific and respectful approach:
- Ideally from the owner of the acquiring company, owner to owner
- Referencing why the company is admired and how the two businesses could fit
- Proposing a conversation, not a transaction
- Respecting that the owner may not be ready, or may never want to sell
Some owners prefer to have an adviser make the first approach to preserve confidentiality. Others value the directness of an owner-to-owner conversation. Both can work.
Step 4: Build the relationship
The first meeting is rarely about a deal. It is about understanding the other owner: their history, their plans, their concerns about the future. Many owners care deeply about what happens to their employees, customers and the company's name. Listening carefully to those concerns is the foundation of any future transaction.
Stay in touch. Share relevant news. Invite them to events. When the owner's circumstances change, you want to be the person they call.
Step 5: Recognise the moment
Succession questions often surface through events: a health issue, a family decision, the loss of a key manager, a large investment the owner does not want to make. When an owner indicates readiness, move with care. Propose a structured but unhurried process, and be clear about what you can offer beyond price, such as continuity, a role for the owner and a future for the team.
Step 6: Keep discipline
Relationship-led deals can create emotional commitment on both sides. Still carry out full due diligence, value the business on its merits and walk away if the fit is not right. A long relationship is not a reason to overpay.
Common mistakes
- Generic outreach. Mass letters signal a lack of seriousness.
- Pushing too early. Pressure closes doors that patience would have opened.
- Giving up too soon. Many proprietary deals take years to mature.
- Neglecting confidentiality. Owners worry about rumours; discretion builds trust.
- Inconsistent follow-up. A relationship that goes quiet is quickly forgotten.
Making it a routine
Proprietary sourcing works best as a steady, ongoing activity rather than a campaign. A simple quarterly review of the target map, a few personal conversations and consistent follow-up can, over time, produce a pipeline of opportunities that competitors never see.
How LXN works with owners
We help owners build acquisition maps, approach companies discreetly and nurture relationships until the timing is right. Our network across Europe and North America, and our own experience as investors and operators, help owners find opportunities that never appear on the open market.
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