February 24, 2026

What Proprietary Deals Are Actually Worth: Off-Market vs in a Process

A proprietary deal isn't just easier to win. It's usually cheaper. The same company tends to cost more once a banker runs a process, and the spread shows up clearly in the data.

There's a reason everyone in this business chases proprietary deals, and it isn't only that they're easier to win. The same company tends to cost meaningfully less off-market than it does once a banker is running a process around it.

The premium for buying into a process is real, and it shows up in the numbers.

The Auction Premium

When an intermediary takes a company to market, their entire job is to create competition. Multiple bidders, a timeline, the implicit threat that someone else will pay more. That pressure does exactly what it's designed to do: it pushes the price up. You're no longer negotiating with an owner. You're competing against every other buyer in the room.

What the Data Shows

Deal databases that track lower-middle-market transactions, GF Data and similar sources, have shown the same pattern for years. Quality businesses under roughly $25M in enterprise value tend to trade in the mid-single-digit EBITDA range, and intermediated deals consistently price higher than comparable deals that weren't broadly shopped.

As a rough illustration: where a proprietary deal might get done around 5x EBITDA, the same company run through a competitive process can clear closer to 6 to 6.5x. That's on the order of one to one and a half turns of EBITDA, paid purely for the privilege of bidding against other people. The exact spread moves with size, sector, and the year, but the direction never does.

Why Proprietary Is Cheaper

Off-market, the dynamics invert, and it's worth being precise about why. The owner you reach directly is usually a founder who has run the business for twenty or thirty years and has most of their net worth tied up in it. They are not a financial seller optimizing for the last dollar, because no banker has reframed the sale as a number to be maximized. Their reference point isn't "what could I get in a competitive process," it's "is this a fair price and the right home." So they weigh things an auction strips out: whether their employees keep their jobs, whether their name stays on the building, whether they have to suffer through six months of management presentations and data-room requests. A direct buyer who solves those problems is genuinely worth more to that owner than a higher bid attached to a painful process and an unknown acquirer. That's the real mechanism behind the lower multiple. You're not underpaying. You're paying for a different set of things the seller actually cares about, and a process is precisely the machine that erases all of them and leaves only price.

The honest counterpoint is that a cheaper company is sometimes cheaper because it's worse. Off-market deals skew toward businesses that wouldn't survive real scrutiny: customer concentration, owner dependence, books that don't reconcile. That risk is real, and it's why proprietary isn't free money, it's a discount that comes bundled with diligence work the banker would otherwise have done for you. The distinction that matters: a banked deal is cheaper because nobody's competing for it, which is value you capture. A bad off-market deal is cheaper because it's broken, which is a cost you inherit. Telling those two apart is the entire skill.

The Catch

None of this is free, and the cost is structural, not just effort. A banked process hands you a curated company, a populated data room, a teaser that frames the story, and a timeline that tells you exactly when to show up. Proprietary work means you generate all of that yourself: you find the company before anyone's packaged it, you verify numbers nobody has audited for the sale, you build trust with an owner who didn't wake up wanting to sell, and you do it on no timeline at all, which means it can take months of contact before anything happens, or nothing happens. The deeper reason most buyers don't do enough of it isn't laziness, it's incentives. Sourcing is unpredictable and unrewarded until it closes, while a banker's deal arrives pre-qualified with a clock on it, so it always feels more urgent than the slow relationship that might pay off next year. Teams optimize for what's in front of them. The discount on proprietary deals persists precisely because it's paid in patience, and patience is the one input that doesn't scale by hiring another associate.

Why a Turn Matters

A turn of EBITDA sounds small until you compound it. Entry multiple is one of the largest drivers of return, and paying a turn or two less on every deal, across a whole portfolio, over a hold period, is the difference between a good track record and an average one. You can't always control the exit. You have real control over what you pay going in.

That's the case for sourcing proprietary deals, in one number. It's also what Equitle is built to make possible at scale: finding the companies worth a direct conversation before they ever reach a process, so the lower entry multiple is something you can repeat, not something you stumble into.

Hazyk Obaid

CFO, Co-Founder, Equitle