M&A deal sourcing is discussed as a skill and behaves like a portfolio of channels with very different costs and very different conversion. Intermediary relationships, direct outreach, inbound reputation and paid data each produce opportunities, and each consumes a different resource: partner time, associate time, marketing budget or licence fees. Almost no firm can say which is paying, and the measurement that would tell them takes one field. This page sets out the four and the measurement.
Intermediaries: cheap in cash, expensive in partner time
Lawyers, accountants and other advisers send work to people they have seen perform. The cost is years of partner attention and it is invisible in any budget, which is exactly why it gets under-managed. The only way to see the return is to record who sent what, which nobody does consistently unless it is a required field.
Direct outreach: cheap to start, brutal conversion
Approaching owners cold converts at a low rate and consumes associate time in large quantities. It is the channel firms turn to when the pipeline is thin, which is also when they have least capacity to run it properly. Measured honestly it is often the most expensive per closed deal, and it is almost never measured honestly.
Inbound: slow to build, cheapest per deal once it exists
Reputation, published work and a firm that people can find. It takes years and produces opportunities that are usually further along and better qualified than any other channel. The difficulty is that the investment and the return are separated by so much time that neither gets attributed to the other.
Paid data: predictable cost, variable value
Subscriptions produce target lists on demand. At scale they earn their price; below it they are an expensive way to buy a list you needed once. The test is how many lists a year you genuinely act on, and it is worth counting rather than estimating before renewal.
Questions people ask about m&a deal sourcing
Which channel is best?
Whichever your record says converts. That is why source is the one field worth making mandatory: without it the answer is an opinion.
How long does inbound take?
Years, and the lag is why it is under-invested in. It is also usually the cheapest per closed deal once it exists.
Is paid data worth it for a small firm?
Count the lists you acted on last year. If it is one, buying that list would have been cheaper than the subscription.