In a brokered deal, an intermediary hired by the seller markets the business and invites buyers to compete. In a proprietary deal, the buyer, or a firm working for the buyer, finds the owner and starts the conversation before any sale process exists. Both lead to real acquisitions. They differ in who the intermediary works for, how much competition there is, and how much control the buyer has over timing.
Side by side
- Who starts it. Brokered: the seller decides to sell and hires a broker or banker. Proprietary: the buyer reaches an owner who may not have decided anything yet.
- Who the intermediary works for. Brokered: the seller. The broker's job is the best price and terms for the seller. Proprietary: if there is a sourcing firm, it works for the buyer.
- Competition. Brokered: several buyers, often with a bid deadline. Proprietary: usually one buyer at first, unless the owner chooses to bring in others.
- Information. Brokered: a prepared package (teaser, confidential information memorandum, data room) on the broker's schedule. Proprietary: the buyer learns about the business through conversations, and the owner may not have numbers ready.
- Pace and control. Brokered: the process sets the timeline. Proprietary: the owner's timing sets it, which can be slower to start but leaves room to build trust.
- Inventory. Brokered: limited to the businesses brokers are marketing at the moment. Proprietary: any business that fits the buy box, whether or not it's for sale.
- Effort. Brokered: the buyer's work starts when a listing appears. Proprietary: the buyer, or their sourcing firm, does the work of finding, contacting and following up with owners.
Which one to use
Many buyers use both. Brokered deals are worth watching because they're ready to transact and come with information. Proprietary sourcing is how a buyer reaches owners who aren't selling through anyone yet, and avoids bidding against a crowd. If your buy box is narrow, or you're competing against better-funded buyers on listed deals, proprietary sourcing tends to matter more.
A note on terms
"Broker" covers different things. A business broker usually represents sellers of smaller companies. In securities transactions, a broker-dealer is a firm registered to buy and sell securities for others; see the SEC's Investor.gov definition. Aligned Profit is neither. We are not a registered broker-dealer and don't represent clients in securities transactions; we find and qualify owners for buyers. How it works describes our role.
Common questions
Are proprietary deals always cheaper?
No. Being first removes the pressure of a competing bid, but price still depends on the business, the owner's expectations and the terms. What proprietary sourcing changes is the process, not the value of the business.
Can a proprietary deal turn into a brokered one?
Yes. An owner who hears from one buyer may decide to hire a broker and test the market. Building trust early and being straightforward about terms is the best protection against that.
Why would a seller choose a proprietary buyer over a broker?
Some owners want privacy, a faster or simpler process, or a buyer they've come to know, and would rather not have their business marketed to many buyers. Read questions to ask before pursuing an off-market business for the buyer's side of that first conversation.