Research · 15 min

What is proprietary deal flow? Functionally, it is an acquisition opportunity that arrived through your firm's own work rather than through a competitive process built by someone else. That rough answer conceals three distinct, narrower definitions running in parallel inside almost every firm, each tied to a different role and task — and which one you mean changes what counts as proprietary on any given deal.

The no-other-bidders definition

A deal is proprietary if no competing buyer is in the conversation at the moment you are negotiating. Origination channel doesn't matter — what matters is that the founder is talking to you alone. This is the definition partners reach for first because it determines pricing power. Its weakness is that the status is fragile: a deal can be no-other-bidders on Monday and a five-buyer process by Friday if the founder picks up the phone to a banker friend.

The off-market definition

A deal is proprietary if no sell-side banker is running a process. The criterion is structural: if a CIM, bid date, or competitive process exists, the deal is not proprietary, regardless of who introduced you. This is the cleanest definition for LP reporting because it is binary and observable from documentation. Its weakness is that off-market and no other competition are not the same thing — a founder in unstructured conversations with five different PE firms, none backed by an advisor, is technically off-market under this definition.

The relationship-led definition

A deal is proprietary if your firm originated the opportunity through your own work: thesis-driven research, direct relationship building, warm path mapping, or any sourcing activity your firm controls. The criterion is who built the conversation, not who else is in it now. This is DealTree's preferred definition — it's the only one of the three that names a process the firm can directly invest in. Investment in those channels compounds; investment in being lucky enough to be the only bidder does not.

Where the definitions collide

Most LMM disputes about whether a deal counts as proprietary aren't about clean off-market deals or clean broad auctions. They're about the gray zone in the middle: a banker tips two or three firms, no CIM, no formal process, but you're not alone in the conversation. Under no-other-bidders, that deal is not proprietary. Under off-market, it is. Under relationship-led, the answer depends on whether the firm's own work produced the conversation or the banker did. Three definitions, three answers, one deal.

Two firms with identical ‘70% proprietary’ headlines can be running opposite playbooks: one investing in relationship infrastructure and warm-path discovery, the other accepting whatever the banker network sends and counting the wins. Same number, different futures. The relationship-led definition is the strategically important one precisely because it's the only one you can build infrastructure around.