Acquisitions

Off-market Deals

Learn why finding a business before it's listed — off-market — is one of the highest-return moves in acquisitions.

  • Beginner
  • 9 min total
  • 12 chapters

What decision this helps you make: Whether and how to source businesses directly (off-market), and why the lack of competition lowers the price.

What this topic is

Off-market (proprietary) deals are businesses a buyer finds directly — through outreach and relationships — before they're publicly listed. With no auction, there's little buyer competition, so they commonly cost ~0.5–1.5× EBITDA less than marketed deals.

Why it matters

Price is set by competition among buyers. Remove the competition — by finding a business before it's listed — and you remove the bidding war, so off-market sourcing is one of the highest-return moves in acquisitions.

Who should learn it

Anyone who wants to buy a business below the auctioned price.

What you will understand

  • Understand off-market deals as businesses found before they're listed
  • See why fewer buyers means a lower price (no auction)
  • Know off-market deals cost ~0.5–1.5× EBITDA less than marketed ones
  • Weigh the trade-offs: harder to find, messier, more diligence

Prerequisites

Common misconception

"To buy a business, you look at what's for sale." The best deals are often the ones that aren't listed yet. When you find a business before it hits the market, there's no auction — no crowd of buyers bidding the price up — so off-market deals commonly cost ~0.5–1.5× EBITDA less than the same business sold competitively.