Proprietary search vs brokered deals: sourcing your own acquisition

Sourcing and funding are different questions

A searcher running direct outreach to owners can be entirely self-funded, backed by personal savings and a bank facility. A search fund, backed by investor capital raised before the search begins, can just as easily run its process through business brokers. Where the deal comes from and how the search itself is paid for sit on separate axes, and get decided independently. Keeping the two apart matters, because collapsing them into one question leads to the wrong comparison in a conversation with a lender.

What is proprietary search?

Proprietary search is finding an acquisition target directly, off-market, without a business broker running the sale. It usually means direct outreach to business owners who have not listed their business for sale, built through cold letters, phone calls, industry events, or a personal network developed over years in a sector. The seller has not engaged anyone to manage a process. If a deal happens, it happens because the buyer found the seller and built enough trust to start a conversation about price and terms. Once a target is found this way, our business acquisition calculator gives a quick read on what it can carry before that conversation goes further.

What is a brokered deal?

A brokered or intermediated deal is sourced through a business broker or M&A advisor engaged by the seller to run a structured sale process. The broker prepares an information memorandum, markets the opportunity to a pool of prospective buyers, manages inbound interest, and sets the pace through to due diligence and settlement. The buyer is responding to an opportunity that has already been packaged and put in front of the market, rather than creating it.

The trade-offs

Each route carries a different shape of effort and risk.

Both routes can work. A proprietary search can produce a lower entry price and a seller who is genuinely invested in seeing the buyer succeed, because no process pushed for the highest number. A brokered deal can move faster and gives the buyer a market-tested price, because the seller and the broker have already tested what buyers are prepared to pay.

The finance angle

This is where the difference stops being a search question and starts affecting how a deal gets funded.

An off-market proprietary deal, built on a direct relationship with the seller, often leaves the most room to negotiate a vendor finance or deferred component. The seller has come to know the buyer personally rather than through a broker's introduction, and that kind of trust can translate into a willingness to leave part of the price in the business, whether that is an earn-out, a deferred payment, or in some cases a vendor loan. The difference between those structures determines how a bank reads them, which is worth understanding before the negotiation starts (see our guide to vendor finance vs deferred payment). Without a competing bidder pushing the seller toward the cleanest, fastest offer, the negotiation can be shaped around what actually works for both sides.

A competitive brokered process runs the opposite way. The broker's job is to maximise price and certainty of settlement for the seller. Multiple buyers bidding against each other compresses the room for soft terms. A seller weighing two or three offers has little reason to accept a deferred structure from one buyer when another is offering a clean, fully funded settlement. Vendor finance still shows up in brokered deals, but it tends to be smaller and more tightly documented, because the broker and the seller's advisors are managing the process to protect the seller's position.

The sourcing route also changes what a lender sees at the finance stage. A brokered deal usually arrives with an information memorandum, prepared financials, and a packaged story that has already been through some professional scrutiny before it reaches the bank. That packaging is itself a form of credibility, a well-prepared IM signals the seller and their advisors have done groundwork before going to market. A proprietary deal can still be funded on sound numbers. The difference is the preparation: more of the credit story has to be built from raw tax returns and management accounts before it reaches a bank, work that a brokered deal often arrives with pre-packaged.

Which route should you run?

Most serious searchers end up running both channels at once rather than choosing one exclusively. A defined thesis, a specific sector, size range, and geography, makes proprietary outreach productive rather than a search in the dark. A broad or exploratory search benefits more from broker relationships, which curate opportunities and reduce the risk of chasing a deal that collapses late for reasons a broker would have flagged early.

Where FGO comes in is the same either way. We work through what the buyer can bring to the table, what the lender will read from each type of deal, and how to position a proprietary find or a brokered opportunity so the finance keeps pace with the deal itself. Once you have a target, we structure the finance and take it to the lenders across the Big 4, challenger banks and private credit whose appetite fits, so you are represented to several at once rather than approaching one lender cold. The sourcing route changes the preparation work involved, and the fundability rests on the numbers either way.

For the wider picture on financing an acquisition, see our guide to ETA and business acquisition finance in Australia, or read how we approach acquisition finance once a deal is under negotiation.

Frequently asked questions

This article is general information only and is not personal financial or legal guidance. Speak to your broker about the finance implications of your sourcing route, and to your solicitor and accountant, before you commit to a deal.