Deal Origination
Principal-Led Deal Origination vs. Traditional Buyside Advisory
Buyside advisors source from the same commercial databases as every other buyer. Over 90 percent of lower middle market companies never appear in those databases. We build target universes from primary regulatory sources, run outreach under the buyer's name, and the buyer keeps the work.
Your name on every approach. Your thesis, not a shared mandate list. Your relationships at the end.
Buyside advisors charge $5,000 to $15,000 monthly retainers plus Lehman-variant success fees of 1 to 5 percent depending on deal size. Tail provisions of 12 to 24 months create shadow costs that persist after the engagement ends. Over 90% of lower middle market companies never appear in commercial deal databases. Praxis Rock builds target universes from primary regulatory sources and runs outreach under the buyer's name as a principal, and the buyer keeps the work.
90%+
LMM Companies Not in Commercial Databases
40%
SIC Codes That Are Wrong
3 wk
Universe Build Time
12-24 mo
Typical Buyside Tail Provision
SIDE BY SIDE
How the Two Models Compare
Six dimensions that determine whether your deal flow is actually proprietary or just repackaged database output.
Data Source
Commercial deal databases that every subscriber accesses. Over 90% of lower middle market companies never appear.
Primary regulatory filings, licensing databases, government records, trade directories, company websites. Built fresh per engagement.
Target Classification
SIC codes assigned at registration. Wrong roughly 40% of the time because businesses evolve but codes don't.
Classified by actual current operations from primary-source analysis and company website review.
Outreach Brand
Intermediary approaches on behalf of an unnamed buyer. Owners ignore 3-5 similar banker approaches per month.
All outreach under your name with a warm path reference. Principal outreach converts at 5-15% vs. sub-2% for intermediaries.
Who Keeps the Work
Advisor retains relationships and intelligence. Tail provisions mean you owe fees on targets introduced during that window.
You keep the work: target universe, warm path map, outreach materials, response data.
Conflict of Interest
Advisor runs 3-5 concurrent mandates in overlapping sectors. Your targets appear on another client's shortlist.
Target universes kept separate per engagement. No competing mandates in your sector.
Timeline
4-8 weeks to first introductions. Limited by advisor bandwidth across concurrent mandates.
Universe built in 2-3 weeks. First qualified conversations within 4-6 weeks of launch.
| Dimension | Buyside Advisory | Praxis Rock |
|---|---|---|
| Data Source | Commercial deal databases that every subscriber accesses. Over 90% of lower middle market companies never appear. | Primary regulatory filings, licensing databases, government records, trade directories, company websites. Built fresh per engagement. |
| Target Classification | SIC codes assigned at registration. Wrong roughly 40% of the time because businesses evolve but codes don't. | Classified by actual current operations from primary-source analysis and company website review. |
| Outreach Brand | Intermediary approaches on behalf of an unnamed buyer. Owners ignore 3-5 similar banker approaches per month. | All outreach under your name with a warm path reference. Principal outreach converts at 5-15% vs. sub-2% for intermediaries. |
| Who Keeps the Work | Advisor retains relationships and intelligence. Tail provisions mean you owe fees on targets introduced during that window. | You keep the work: target universe, warm path map, outreach materials, response data. |
| Conflict of Interest | Advisor runs 3-5 concurrent mandates in overlapping sectors. Your targets appear on another client's shortlist. | Target universes kept separate per engagement. No competing mandates in your sector. |
| Timeline | 4-8 weeks to first introductions. Limited by advisor bandwidth across concurrent mandates. | Universe built in 2-3 weeks. First qualified conversations within 4-6 weeks of launch. |
THE FEE ANATOMY
What a Buyside Advisory Engagement Actually Costs
Monthly retainer: $5,000 to $15,000. Paid regardless of outcome. Some advisors work on success-fee-only structures for larger mandates, but most require a retainer to cover search costs. A 12-month engagement at $10,000 per month produces $120,000 in retainer fees before any deal closes.
Success fee: 1 to 5 percent of enterprise value. Sub-$50M deals typically carry 3 to 5 percent fees under modified Lehman formulas. Larger transactions ($50M to $100M+) run 1 to 3 percent. Minimum fee thresholds of $250,000 to $500,000 have become standard. On a $30M acquisition, a 3 percent flat fee produces $900,000. The modified Lehman formula on that same deal produces approximately $410,000.
Tail provision: 12 to 24 months. If you acquire any target the advisor introduced during that window, you owe the full success fee. Institutional decision cycles in lower middle market M&A routinely exceed 12 months. The tail creates a shadow cost that persists well beyond the engagement.
What changes with a principal-led program: the work is built around your thesis instead of a banker's list of concurrent mandates, every approach goes out under your name, and every relationship it opens is yours.
BY BUYER TYPE
Who This Serves
PE Funds
$100-300M AUM
Committed capital and a defined thesis, but your deal team reviews the same CIM teasers as seven competing funds. Proprietary deals sourced outside brokered channels trade at 15 to 30 percent lower multiples than auctioned transactions. On a five-deal program, that multiple spread exceeds any intermediary's fee by an order of magnitude.
Independent Sponsors
No committed capital
You need proprietary deal flow to attract capital providers, but you lack the team to generate it. We run the outreach while you manage capital provider relationships and diligence. Owners want to speak to the principal, not an intermediary, and you keep the work at the end.
Corporate Acquirers
Strategic M&A
Buy-and-build strategies require a systematic pipeline of off-market targets, not intermittent brokered introductions. We identify bolt-on targets and geographic expansion candidates from primary sources. Outreach goes out as a direct note from your corporate development team.
Family Offices
Direct investing
Most family offices doing direct investments rely on personal networks and a handful of brokers. That network runs dry after the first two or three deals. We provide the full sourcing work for founder-led, profitable businesses, with every approach under your name.
Frequently Asked Questions
Buyside advisory firms assign a banker to source acquisition opportunities through their personal network and commercial deal databases. Over 90% of lower middle market companies never appear in those databases. Principal-led origination builds target universes from primary regulatory sources: state licensing databases, DOT compliance records, CMS enrollment files, trade association directories and company websites. Targets are classified by actual current operations, not stale SIC codes. Outreach runs under the buyer's name, not through an intermediary.
Buyside advisory firms typically charge monthly retainers of $5,000 to $15,000 plus success fees calculated on Lehman or modified Lehman formulas. On sub-$50M deals, success fees run 3 to 5 percent of enterprise value. Some advisors work on success-fee-only structures for larger mandates. Minimum fee thresholds of $250,000 to $500,000 are common. Most agreements include 12 to 24 month tail provisions.
Owner-operators who built a company over 20 or 30 years want to speak with the actual buyer, not a hired intermediary. When an owner hears from a banker saying "I have a client interested in your business," the immediate reaction is suspicion about who the buyer is and why they're hiding behind an agent. Connection-anchored outreach from principals converts at 5 to 15 percent. Generic intermediary outreach converts below 2 percent. This gap is structural, not tactical.
Yes. The two approaches draw on different sources. The buyside advisor brings targets from commercial databases and their personal network. We bring targets from primary regulatory sources no database has indexed. Some clients use the advisor for a specific geography where the advisor has deep relationships and our program for systematic coverage everywhere else.
Yes. The buyer keeps the work: the complete target universe with classification data, the warm path map, the outreach materials, the response log and a CRM-ready export. With a buyside advisor, the relationships and intelligence typically stay with the advisor, and tail provisions mean you owe success fees on targets they introduced during that window.
An internal business development hire costs $120,000 to $180,000 in salary plus benefits, takes three to six months to recruit, and another three to six months to ramp. They research companies one at a time using the same commercial databases every firm subscribes to. We read thousands of primary sources at once, classify targets at a scale one person cannot match, map the warm paths from your team to each owner, and write each note one-to-one around a specific shared connection.
Related
Learn how the seven-step method works, from primary source research through the program and the handover of the work.
PE-backed portfolio companies can apply the same method to customer acquisition: principal-led business development compared with traditional outbound.
For fundraising, see how a capital formation program compares.
The best targets are not in any database. The question is who reaches them first.
Where the research and the program live: the Praxis Rock Platform.
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