Acquisitions
Deal Sourcing
Learn why buying a business is a numbers game, and how a full pipeline gives you the one thing that prevents overpaying: the power to walk away.
- Intermediate
- 9 min total
- 11 chapters
What decision this helps you make: How to build enough deal flow to find a good business at a good price without settling.
- Related case study: A Regional Equipment Rental Operator
- Related data & research: Small Business Acquisition Market Overview
What this topic is
Deal sourcing is building a pipeline (deal flow) wide enough that a genuinely good business at a good price appears. The funnels are steep, and buyers commonly review ~80–100+ businesses to close one.
Why it matters
A full pipeline gives you the single biggest protection against overpaying: the power to walk away from any one deal. Thin deal flow forces buyers to overpay for a mediocre business because it's the only option in front of them.
Who should learn it
Anyone planning to buy a business, before they fall for the first one they find.
What you will understand
- Understand deal sourcing as building a pipeline (deal flow)
- See how steep the funnel is (~80–100+ reviewed per close)
- Know that a full pipeline gives you the power to walk away
- Build both brokered and off-market channels
Prerequisites
Common misconception
"I found a business for sale, so let's buy it." One option is a trap: with nothing to compare it to and no ability to walk away, you'll overpay or overlook problems. Buyers commonly review ~80–100+ businesses to close one. A full pipeline, reviewing many and buying few, is what gives you the power to walk away, the biggest protection against overpaying.