Deal origination is the M&A term for finding the right businesses to buy, including ones that are not for sale, and turning them into real conversations with their owners. It sits between deciding you want to grow by acquisition and doing an actual deal.
In plain terms: you decide what you want, someone researches every business that could fit, the right owners are approached in confidence, and you end up meeting the ones who are open to a conversation.
Professional buyers take this seriously. In a survey of 79 private equity investors, about 36% of the deals they completed were ones they had found themselves, rather than being brought to them by banks or brokers (Gompers, Kaplan & Mukharlyamov). That survey was mainly of US firms and is now about ten years old, so read it as a sign of the habit, not a UK benchmark.
What goes into deal origination?
Origination has five stages. Each one depends on the one before it.
1. The brief
Everything starts with what you want to buy and why, written down. That is your acquisition thesis: sector and activity, size, geography, what the business must bring, the kind of owner you expect to deal with, and what would rule a business out. Without it, research produces a list but not a useful one.
2. Company research
Next, every business that could fit is identified and checked against the brief. Sources include Companies House, commercial company databases, trade associations, accreditation registers, websites and trade press. Each has gaps. Industry codes are often too broad, and many smaller companies do not file profit figures, so a good researcher looks beyond the obvious fields. The output is a prioritised list that you agree before anyone is contacted.
3. Owner identification
For a founder-led business the right person is usually the founder or majority shareholder, not the managing director if they are different, and never a generic inbox. Getting this wrong can close a door that is hard to reopen.
4. Confidential outreach
Owners are approached personally, with a message about their business specifically, framed as a private and exploratory conversation rather than an offer. Our guide to approaching a business owner covers how to do this well. Follow-up is part of the job: one letter rarely gets a reply from a busy owner.
5. Qualification
When an owner responds, someone needs to find out whether this is a real opportunity. That means a first conversation about the business, what the owner wants, their timing and whether the fit holds up. Our guide to qualifying an acquisition target covers the questions.
What is the difference between a record, a contact and a qualified lead?
The words get used loosely, which is how buyers end up paying for a list and expecting a pipeline. These are the stages a business moves through. Most never move past the first two, and that is normal.
| Stage | What it means | What you know | What it is not |
|---|---|---|---|
| Company record | A business identified in research that appears to fit | Name, location, activity, ownership, filed accounts | Evidence the owner wants to sell |
| Contacted owner | The owner has been approached in confidence | Whether and how they replied | Interest in a sale |
| Interested party | The owner has agreed to a confidential conversation | Their initial view, rough timing, what matters to them | A commitment to sell, or a price |
| Qualified introduction | An interested owner whose business still fits after that conversation, introduced to you | Enough to decide whether to spend your time on it | A deal |
Two things follow. First, numbers at the top of the table mean little on their own. A list of 300 company records is just research. Second, a qualified introduction is a valuable thing, but it is the start of a negotiation, not the end of one.
What should you receive from origination?
Whether you run origination yourself or use an adviser, you should end up with:
- An agreed brief that rules businesses in and out.
- An agreed target list with a short reason for each business being on it.
- A record of every approach: who, when, what they said and what happens next.
- A short written summary of each interested owner: what the business does, what you know and do not know, what the owner wants, and any early concerns.
- Introductions to owners who are open to a confidential conversation about a sale.
You should also expect honest reporting on the businesses that said no, and why. That tells you whether the brief is right.
Where does origination stop and the deal begin?
Origination stops at the introduction. From there, the work changes character and other people join.
- First meetings. You and the owner get to know each other. Fit and trust matter more than figures at this point.
- Information and valuation. The owner shares accounts and key information under a confidentiality agreement. You work out what the business is worth to you.
- Heads of terms. You agree the price and main terms in writing.
- Due diligence. Your accountants and solicitors check what you are really buying.
- Completion, then bringing the two businesses together without losing people or customers.
These later stages are often called execution. A buyer with a clear brief and a good origination process arrives at them with a choice of businesses, rather than one option they feel they have to make work. Our guide to how long an acquisition takes covers the timings after introduction.
Why do buyers struggle with origination?
Usually for one of three reasons:
- No written brief. The search drifts towards whichever business turned up last.
- No time. Research and follow-up need steady hours each week, and the owner or finance director is already full.
- Relying on the network alone. Accountants, lawyers and brokers are good sources, but they mainly hear about businesses that are already for sale. Owners who have not decided to sell need to be found.
Should you run origination in-house or use an adviser?
Both can work. In-house gives you full control and builds knowledge inside the business, but needs time, data and someone who is comfortable approaching owners. An adviser brings the time and method, and can approach owners without naming you until both sides want to talk. Our guide to in-house or outsourced corporate development sets out the trade-offs.
There are two common ways to buy origination help. One is a bounded project: a defined search with a fixed end point and a clear output. The other is continuous support, where an outside team runs your search, pipeline and live deals month after month, which suits owners planning several acquisitions. That is what our Acquisitiv Expansion Partnership does.
Starting with a defined search
If you want to see what origination produces before committing to anything ongoing, the bounded route is the place to start. Acquisitiv Target 45 researches 100 businesses that fit your criteria, agrees the list with you, approaches the owners in confidence and makes five introductions to owners open to a confidential conversation about a sale. If we are short at day 45, we keep going at no extra fee. It does not promise a completed deal.
Questions buyers ask
Is deal origination just database research?
No. A database gives you names. Origination checks those names against what you want to buy, identifies the right owner, approaches them in confidence, follows up and records what they say. The research is the start of the work, not the result.
What makes a lead qualified?
A qualified lead is a business that fits your criteria, whose owner has agreed to a confidential conversation about a possible sale, and where enough is known to judge whether it is worth your time. A business that only looks right on paper, or an owner who has simply replied, is not yet qualified.
Where does origination finish and the deal begin?
Origination usually finishes with an introduction: you meet an owner who is open to talking. From there the deal work starts, including first meetings, sharing information, agreeing the price and main terms in writing, due diligence and completion.
What is the difference between on-market and off-market origination?
On-market means responding to businesses being actively sold, often through a broker. Off-market means approaching owners whose businesses are not being marketed. Most buyers use both. Off-market reaches businesses you would not otherwise see but takes more research and patience.
Michael Ferguson is the founder of Acquisitiv and a Partner at CDI Global in the United Kingdom. A chartered certified accountant (ACCA), he was head of M&A at a global, family-owned spirits group and finance director at a FTSE-listed company. He acts only for buyers. More about Michael →