Deal flow is the whole game early on. You will look at a lot of businesses to buy one, and the quality of what you see depends almost entirely on where you look.
The three channels
- Marketplaces and listing sites: easy to browse, heavily picked over, priced for a crowd.
- Brokers: they work for the seller, but a good relationship gets you deals before they list.
- Off-market outreach: writing directly to owners who have not decided to sell. Slowest, least competitive, usually the best prices.
Off-market is where the advantage is, and it is mostly a volume and patience exercise: build a list of businesses matching your thesis, find the owner, and write a short, human letter that does not read like private equity. Most get ignored; a few reply, and those conversations have no other bidders in them.
Filter fast and unemotionally
- Owner dependence: does the business survive the owner leaving?
- Customer concentration: one client over about a quarter of revenue is a real risk.
- Margin and trend: three years of direction matters more than one good year.
- Why they are selling: retirement and boredom are fine, decline and a lost contract are not.
Try it
Write your buy box in five lines: industry, size range, location, owner involvement, and price ceiling. Then say no to everything outside it for three months. Discipline here is what makes the eventual yes credible.