deal sourcing in micro PE: building your pipeline

This is part 2 of a series on building your own micro PE firm. Read part 1 of the series here.

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Buying cash-flowing businesses is one of the greatest opportunities of the next decade.

In my previous breakdown, I talked about capitalizing on this opportunity by starting a Micro Private Equity (PE) firm.

Sold on the idea? Great—now I’m going to rain on your parade a little.

The window of opportunity is shrinking as everyone and their mom now wants to buy businesses, thanks to TikTok influencers flooding the space. The hype is increasing competition for the best deals.

The implication? If you don’t have a proprietary way to source high-quality deals, you’ve got a snowball’s chance in Orlando (hell) of making this thing work.

Here’s the main problem—most search fund entrepreneurs are sourcing deals like it’s 1999.

Cold calls. Boring emails. Blasting brokers with vague, cookie-cutter criteria like, “high-margin businesses with strong competitive moats.”

After speaking with hundreds of business owners, I’ve gained a unique perspective on getting the attention of both owners and brokers. I’ve seen the good, the bad, and… well, the downright ugly.

Here’s how to fix your approach:

1. stop fishing in the same pond — build your own deal flow

The traditional micro acquisition strategy looks like this:

1. Buy an email list of businesses.

2. Send a generic email like, “Hey, are you open to selling your business?”

3. Get ignored.

4. Repeat steps #2 and #3 until your soul leaves your body.

Sure, you’ll eventually catch something. But it’s usually a bottom-feeder—overpriced, underperforming, or picked over by 20 other buyers.

Instead, let’s flip the script and focus on building a proprietary system for deal flow. Here’s how:

should I focus on direct outreach or broker outreach? spoiler: do both

The reality is that your deal sourcing system is going to require a mix of both direct owner outreach and broker outreach. Here are the pro and cons of both approaches.

direct outreach: the DIY hustle

Pros:

• Control: You speak directly to sellers. No middleman fluff or overused templates.

• Cost-Effective: Save on broker fees, and invest that money into your search fund journey.

• Relationship-Building: Authentic, one-on-one conversations can build trust from day one.

Cons:

• Time-Consuming: It’s like online dating— you might never hear back. Or worse, you might end up getting catfished 😬

• Skill Intensive: Requires finesse, research, and the thick skin to handle a “no thanks” (or worse).

The Common Approach:

• Think cold emails, LinkedIn DMs, and good old-fashioned letters. Don’t get me wrong - these approaches can work if personalized - otherwise they just get lost in the crowd.

The Uncommon Approach:

• Really want to stand-out? First, figure out exactly what type of business you are interested in owning (industry, size, geography, etc.). Next, start creating content on that business industry, even if you know nothing about it.

• Now you are probably thinking of a 3 letter acronym that includes a W a T and a F - but stay with me for a minute. Here’s why:

  1. Creating content is a cheat code in learning something new. Remember, those that can’t do teach… and those that can’t teach… teach P.E. (kidding! I come from a long lineage of PE teachers and I want to get invited to Thanksgiving this year)

  2. In today’s world, creating content is a natural way to form community.

  3. Guess what happens when you build an world-class business community? That’s right - special access to world-class deal flow.

• Don’t know where to start? Here are some various ways to start building community online:

  • Host a podcast (the host just needs smart questions, not smarts themself 😉)

  • Start a newsletter - a way to hack your first hundred subscribers is to create your newsletter on LinkedIn

  • Create short-form videos - YouTube Shorts, Instagram Reels, and TikTok are the primary targets here.

• The key? Don’t overthink it and remember it’s pretty hard to buy a business if the owner never hears of you.

broker outreach: let the pros do the heavy lifting

Brokers are like the concierge of the business acquisition world—they often have the insider scoop on deals before they hit the public radar.

Pros:

• Access: Brokers often know about opportunities that haven’t even hit the market.

• Credibility: When a respected broker vouches for you, sellers are more likely to listen.

• Efficiency: They filter the noise, saving you time and energy.

Cons:

• Cost: when a broker represents a seller they have an incentive to close the deal at the highest possible price. This means that you may end up paying a higher premium on a brokered deal.

• Competition: Many buyers are chasing the same deals, so you need to stand out.

• Gatekeeping: Some brokers play favorites, sharing top deals with their preferred buyers first—like the teacher's pet who always got picked first for classroom privileges.

The Common Approach:

• Reach out to brokers with generic emails like, “Hi, I’m an interested buyer. Do you have any interesting businesses for sale?”

• Saying this is the business equivalent of a paper straw— it sounds promising— then you want to stab yourself in the eye with a REAL straw.

The Uncommon Approach:

• Find the top 15 brokers in the geographies where you want to live.

• Go to each of them with hyper-specific criteria on the deals you’re interested in. For example, let’s say you’re open to buying within one of the following industries:

  1. Managed IT Services Company

  2. Junk Removal

  3. Power-Washing and Exterior Cleaning

Seem random? Lucky guess—they are!

• For each industry, reach out to 5 brokerages with an email like this:

"Hey [NAME],

I am searching to buy a Managed IT Services Business with a minimum of $250,000 EBITDA within the [geographic preference] area. I am willing to act as CEO of the business after closing and have [$ cash available] to purchase a business.

Are you available for a quick chat this week? I’m finding that I’m speaking to a lot of owners who are NOT a good fit for me, but they are interested in selling. I’d love to refer them to a broker, so it would be great to get a better sense of your firm and process to make the right introduction."

That last part is key. Brokers are in the same boat as you—they’re constantly looking for more (sell-side) deal flow. By genuinely offering to refer deals their way, you’ve made yourself a new friend (make that two for the year! Woohoo 🥳).

The key? Treat brokers like partners, not vending machines. You’ll be surprised how often the "right" deals find their way to buyers who invest in real relationships.

Speaking of partners... another great source of deal flow comes from your Centers of Influence (COIs). And no, that's not some reference to the Illuminati—although if you are connected to the Illuminati, that would probably be an excellent source of deal flow.

COIs generally consist of accountants, bankers, lawyers, and other ‘advisors’ to business owners who can help refer you as a buyer. Let’s get into how to build your COI network and maximize deal flow.

2. building your COI network: it’s all about who you know

The best acquisition entrepreneurs have built a killer Center of Influence (COI) network.

Unlike your experience in high school, this is like being in the cool kids' club—but for getting in on the best deals.

who should make your COI list?

• Accountants / CPAs: These number-crunchers know which businesses are crushing it and usually are the first people to know when their clients are thinking about selling. Accountants also tend to love playing match-maker saying, “I know a guy” faster than the bald dude on Pawn Stars.

• Attorneys: The legal eagles who can spot a clean deal from a mile away.

  • I’ll be honest, AI wrote that sentence and I have no notes 🤣 🦅

• Local Bankers: Bankers are a sneaky source of deal flow. They often are late in the stage (helping people with financing to complete the deal). However, they also have clients at the end of their SBA 7(a) loans who are exploring their options for what’s next. They also know a ton of lawyers + accountants as a conduit of the deal.

• Industry Consultants: The OGs who live and breathe their niche - they'll know when a business is ready for new ownership. Cracking into this group is tough, especially if the consultants have been around for a while, they probably have a nauseating amount of buyers wanting to ‘pick their brain’ on deals 🥴

Whether you're an introvert or an extrovert - the best way to build COI referrals is regular meetings with those people either online or in person (sorry introverts).

That said, it’s easy to forget the last time you connected with ‘Bob at Accounting’ so I use Notion to help me track the last time I met with a COI with regular reminders - check it out below 👇

3. how to talk to sellers without offending them

Having worked on over 50 successful deals, I've watched countless deals die because buyers accidentally offended sellers.

Here’s the low-light list:

• "Your financials are a mess."

• "Why haven’t you automated this?"

• "I can grow this 10x easily."

• “Seems like I am just buying a job.”

• “What am I even buying? I could build this company for way less capital in 6 months”

Translation? "You’re dumb, and I’m smart."

Instead:

• Focus on curiosity, not criticism. "I noticed your margins dipped last year—was that due to market trends or something internal?"

• Compliment genuinely. "It’s impressive you’ve grown this without outside capital."

Share your story. Sellers aren’t just selling a business—they’re choosing who carries their legacy.

My business partners and I often talk about the "goodwill" of a transaction—and we're not talking about the accounting definition of goodwill. We're referring to the relationship quality between buyer and seller and how significantly it impacts the likelihood of a deal closing.

Remember: authenticity wins deals.

4. what size of deal should you focus on as a self-funded searcher?

Here’s the Goldilocks formula:

• Too small (<$250K EBITDA): Typically these businesses are heavily owner-dependent. While this isn't necessarily bad, if your goal is to buy AND grow a business, the squeeze might not be worth the juice (think: prune juice).

• Too big (>$2M EBITDA): Intense competition from PE firms. Need to bring a LOT of cash to the closing table, which doesn’t make a lot of sense as an individual.

• Just right ($300K-$1.5M EBITDA): Sweet spot.

  • Big enough to support debt and provide solid returns.

  • Businesses of this size are usually large enough to have some management in place—or can attract a CEO/General Manager—which reduces your personal involvement in day-to-day operations.

  • Small enough to avoid most PE competition (although this is changing).

  • Often overlooked by traditional buyers.

Want to learn more about buying the right-sized business? Send me an email (morgan [at] this domain) and I will add you to our firm’s buyer office hours.

next steps to take this week

1. Pick one direct outreach strategy and send 10 personalized emails this week.

2. Identify 5 COIs in your network. Offer to buy them lunch this week.

3. Post one piece of content on LinkedIn about your acquisition journey.

Remember, deal sourcing isn’t about luck. It’s about consistency, relationships, and being just interesting enough to avoid the delete button.

every second counts.