Mar 22, 2022
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 min read

How You Can Source Off-Market Transactions

 In both the business and real estate market, off-market transactions continue to be the gold standard for investors looking to differentiate and earn higher returns. While I think there are some valid arguments against this, I tend to agree. An off-market transaction has the opportunity for lower competition and lower prices. In addition, it forces investors to define their target market and focus their efforts on businesses or properties they want to own. This focused effort produces specialization which should provide better underwriting and stronger returns over the long term.

I’m not writing this piece to convince you to focus on off-market transactions. Instead, I want to show you my process for efficient and (hopefully) lucrative off-market sourcing. Larger firms do this in-house and with a similar process, but I wanted to highlight how it’s possible to do this with a limited time and budget.

Define Your Focus Area:

You have limited resources, so you need to be thoughtful about focusing on assets that you’re interested in pursuing. This step can look quite different if you’re looking at a real estate deal or looking to purchase a business. The first component for smaller investors like me is to think about the location. Where do I want to make the acquisition? Choosing the target market is the best starting point, but after that, it differs based on the asset class you’re choosing. At this point, you’re putting together your acquisition criteria.

·  Real Estate: Asset Class, Location, Square Footage, Unit, Previous Transaction, etc.

·  Business: Business Type, Revenue, Employee Count, Online Rating, etc.

This part takes a bit of practice as using too many criteria will leave too small of a list and keeping it too broad will result in a lot of wasted time. It’s important to make sure these criteria match what you’re interested in pursuing. If not, this whole exercise will be a waste of time.

Build Potential Acquisition List:

Once you have the appropriate criteria for the businesses or real estate you’re interested in pursuing, it’s time to put together the potential acquisition list. There are two ways to approach this:

·  Make the list yourself. Most of this information can be found via Google, LinkedIn, and other public means. However, this can take a lot of time.

·  Hire someone to make the list for you. This is the route I’d recommend pursuing because it’s the most efficient way to start making progress. For this to work well, I always set up the excel format that I want the information placed in. This helps limit the back and forth when compiling the information. Be sure to share as detailed instructions as possible, otherwise, you may not get what you’re looking for. At this stage, I do not request any owner information because this typically takes the most time, and it becomes quite expensive if you’re doing it for a large list of potential targets.

Here is an example of the email I sent for a home services roll-up with the appropriate level of instructions. If it’s a complicated industry or business type, I think it’s best practice to find a few of the companies to share with whoever is helping you put the list together.  

 Vet Acquisition List:

Once you get the complete list of companies or real estate locations from the initial search, it’s time to vet these to determine whether they fit within your acquisition criteria. I prefer to go back through the entire list individually and look at them and then visit their website to determine if they’re a fit. This may be based on a specific service area, size of the company, or a variety of other characteristics. For example, in the self-storage world, I’d eliminate any property with a well-run website because my thesis is to focus on underperforming assets.

Off-market transactions are a numbers game, and you should be careful to not remove too many targets from the list. I spend less than one minute on each potential target and if it’s ever in question, I leave it in. Here you can see what I’ve prioritized by 1 and 2 with color-coding. Anything I’m interested in, I put in category 1 and anything else is eliminated in priority 2.

Source Contact & Relevant Information:

Once the initial target list is vetted, it’s time to go back and source relevant contact information for all the targets so that you can reach out to the owners to see if they’re interested in selling their business or property. You can do this yourself, but I find it far more efficient to hire a freelancer to do this efficiently. In real estate, there are several property databases and tax records that allow you to access the owner’s information. For businesses, it can be more challenging, but LinkedIn and email sourcing tools often allow you to access this information quite easily. In addition, it’s quite feasible to leverage Google maps for office locations. It’s most efficient to add this information to the spreadsheet that you’re already operating out of so everything is kept in one place.

Create Sourcing Workflow:

The most important thing when trying to source directly is consistency and messaging. To ensure consistency when contacting potential targets, I upload the information from the excel file into a Notion Board to act as a CRM. Notion has an easy way to import all the information in excel, so it’s stored in Notion properly. I’m sure there are more automated ways to leverage CRMs to manage these workflows automatically. However, these boards act as a way for me to track and execute these sourcing plans seamlessly. You need to determine what you think is the best cadence of outreach and how long you should wait between each of the cadences. Here are the stages and timelines that I set for pursuing self-storage.

1. Email #1 Sent

2. Letter Sent – 1 week later

3. Email 2 sent – 2 weeks later

4. Phone Call 1 – 1 week later

5. Phone Call 2 – 1 week later

6. In progress – in active discussions

7. Deprioritized – ones that gave me a hard No

8. Follow-up in 2023 – These are the ones that suggested a follow-up in the future. I like to set these to annual reminders.

You can see what this looks like here:


Once you do the hard part, this is when you follow your plan, refine your messaging, and get to emailing, calling, and writing letters. Messaging is one of the most important parts of the process and deserves a separate post!

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