Deal Flow

The pipeline of investment opportunities available to a buyer or fund, sourced through brokers, direct outreach, networks, and proprietary channels.

Deal flow refers to the stream of investment opportunities available to buyers, investors, or funds.

Deal Flow Sources

Intermediated (Brokered)

  • Business brokers
  • M&A advisors
  • Investment banks
  • Online marketplaces (BizBuySell, Axial)

Direct (Proprietary)

  • Cold outreach to business owners
  • Industry networking
  • Referrals from professionals (CPAs, attorneys)
  • Trade associations and conferences

Deal Flow Quality

Source TypeCompetitionPricing
Online listingVery highMarket/above
Broker networkHighMarket
ReferralMediumNegotiable
Direct outreachLowBelow market

Deal Flow Metrics

Typical search fund funnel:

1,000 businesses contacted
  → 100 respond positively
    → 30 CIMs reviewed
      → 10 management meetings
        → 3 LOIs submitted
          → 1 deal closed

Building Deal Flow

  1. Define criteria clearly: Industry, size, geography
  2. Multiple channels: Don't rely on one source
  3. Consistent outreach: Direct outreach compounds over time
  4. Network actively: CPAs, attorneys, wealth managers
  5. Track everything: CRM for managing pipeline

Related Terms

proprietary dealbusiness brokersearcher

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