Do you have proprietary deal flow?

LPs look for it, but buying value matters most.

We all know that proprietary deals are rare these days. LPs know that too. Yet, they seem to care about proprietary deal flow more than ever. Why? Because many LPs fear too much money chasing too few attractive deals, resulting in historically high purchase prices. One of the few differentiators is a fund manager’s ability to source deals at reasonable valuations in a frothy market.

So you’re stuck in a situation where LPs hope you have proprietary deal flow, but they don’t really believe that you do. How should you present your deal sourcing advantage?

You likely have a compelling “funnel” showing the number and source of deals reviewed. However, statistics alone aren’t going to tell your story, especially when an LP is skeptical about whether deals are truly proprietary.

Rather, be specific. Use deal “case studies” to qualitatively highlight your approach and strengths. How did you hear about the deal? Why did you win it? Avoid generalities (e.g., “relationship cultivated over several years”), because your competitors are all using the same phrases. Your voiceover during meetings can bring these points to life – elaborating on what you did differently to win the deal is time well spent.

Obviously, highlight any genuinely proprietary deals. For the rest, be clear about how you sourced them: selected by the seller based on industry expertise, limited/narrow process, broken auction, etc. And be open about confirming LPs’ suspicions that almost all deals are intermediated in some way. Honesty will win you points, and your specific examples will provide the best support for the strength of your deal flow.