Private Equity Deal Sourcing: Why PE Firms Only See 18% of Relevant Deals

For private equity firms, deal sourcing in the lower middle market is one of the hardest parts of the job. The market is vast but fragmented: thousands of boutique banks and brokers each bring only a handful of relevant opportunities to market every year. Even the most active PE firms cover less than a quarter of the opportunities that fit their mandate. The result is that sourcing teams—no matter how strong—struggle to consistently achieve comprehensive market coverage.

Axial was built to close this gap. By combining technology, data, and human coverage, the platform expands deal flow sourcing within the advisor-represented channel, surfacing opportunities from lesser-known firms that PE firms might otherwise miss. For funds looking to increase their odds of finding great opportunities at great prices — whether platforms or add-ons — Axial provides a systematic way to do so efficiently and economically.

The Market Coverage Gap

Below is a snapshot from our friends over at Sutton Place Strategies. Every year, they produce a Private Equity Deal Origination Benchmarking report, surveying hundreds of PE firms to gather data about their deal sourcing coverage.

The Critical Finding: 

Even the most active private equity firms are only sourcing a small portion of relevant opportunities available in the market. According to the Report, the median PE firm covers just 17.6% of its relevant deal flow. Even firms in the top quartile only reach 27.5%, and at the very best, market leaders max out around 57.1%.

Private Equity Firms’ 3-Pronged Sourcing Strategy

PE firms with the most comprehensive sourcing strategies break them down into three core sub-components:

1. Intermediary-Represented Platform Opportunities: Relationships with middle market investment banks like Baird, Jeffries, Houlihan Lokey, and Lincoln International, or lower middle market parallels. These firms tend to focus on larger transactions and occupy a less fragmented part of the market.
2. Intermediary-Represented Add-On Opportunities: A multi-pronged, scaled coverage strategy for the thousands of boutique investment banks and business brokers that may occasionally represent a relevant platform opportunity, and usually represent potential add-on acquisition opportunities for PE portfolio companies.
3. Proprietary Deal Sourcing: Direct outreach to owners, often aiming to preempt the buyer competition that would come from the owner’s participation in an advisor-represented broad auction.

It’s no wonder the average PE firm covers less than 20% of relevant deal flow coming from boutique lower middle market advisory firms. They are simply impossible to cover:

• They are industry generalists: while there are some industry specialists in the lower middle market, most are generalists. This means that, for PE firms executing industry-specific, targeted add-on strategies, these advisory firms lack relevance predictability. They may only represent a relevant add-on opportunity once every 3 or 5 years. 
• They are hard to find: information in this part of the market is opaque. Most databases don’t include small advisors and one-man business brokers, and the majority of transactions that close in the LMM do not get publicized on the web.
• The market is fragmented: there are 5K – 10K boutique investment banks to potentially cover. Even with an army of BD associates and directors, the information opacity and lack of relevance predictability render this deal referral segment impossible to cover.

Why Private Equity Firms Turn to Axial

Axial has one primary promise to private equity investors on its platform: maximize coverage of relevant deal flow coming from lower middle market boutique investment banks and business brokers. 

Some quick stats on the platform:

Axial acts as an extension of its private equity firm members’ marketing, business development, and technology teams – allowing investors to source relevant deal opportunities without having to hire additional employees.

How Axial Acquires Deal Flow at Scale

Examples of Platform Opportunities Shared on Axial in 2025

$26M EBITDA High-Growth Home Healthcare Provider

• Description: A fast-growing, trusted home care provider in a fragmented market, offering a scalable platform for consolidation and expansion
• Financial Profile: $295M Revenue, $26M EBITDA
• Location: Middle Atlantic
• Advisor Details: Investment Bank
• Platform Rationale: This business represents an ideal platform investment thanks to its strong growth tailwinds, fragmented market ripe for consolidation, and a defensible position that enables scalable expansion

$11M EBITDA Industrial Automation Services Provider

• Description: A leading North American provider of industrial automation services, delivering workforce augmentation and integration support to OEMs and system integrators
• Financial Profile: $26M Revenue, $11M EBITDA
• Location: Pacific
• Advisor Details: Investment Bank
• Platform Rationale: Secular growth in automation, sticky customer relationships, and a fragmented supplier landscape make it a compelling platform for private equity consolidation

$5.5M EBITDA Third Party Maintenance (TPM) Data Center Infrastructure Services Provider

• Description: A leading third-party maintenance provider for mission-critical data center IT infrastructure, offering recurring, subscription-based services across storage, networking, and server hardware
• Financial Profile: $33.1M Revenue, $5.5M EBITDA
• Location: South Atlantic
• Advisor Details: Investment Bank
• Platform Rationale: High recurring revenue, strong exposure to secular growth in cloud and data infrastructure, and a fragmented services market make this an ideal PE platform for consolidation

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Examples of Add-On Opportunities Shared on Axial in 2025:

$2.3M EBITDA Transaction Processing & Payment Facilitation for Hospitality

• Description: A hospitality-focused payment processing company offering transaction management and facilitation solutions for hotels and restaurants.
• Financial Profile: $6.5M Revenue, $2.3M EBITDA
• Location: South
• Advisor Details: M&A Advisory Firm
• Add-On Rationale: Complements fintech or hospitality technology platforms by adding cross-sell capabilities, expanding merchant relationships, and driving higher transaction volume scale

$2.5M EBITDA Real Estate Tax Strategy Business

• Description: A specialized online provider of engineered tax strategies helping real estate investors and commercial property owners significantly reduce tax burdens.
• Financial Profile: $3.8M Revenue, $2.5M EBITDA
• Location: South Atlantic
• Advisor Details: M&A Advisory Firm
• Add-On Rationale: Ideal add-on for accounting, tax advisory, or proptech platforms, enhancing service offerings with a niche, high-margin solution for real estate clients.

$2M EBITDA Turnkey Permitting Service Provider 

• Description: A permitting solutions provider serving the home improvement industry, offering application, verification, and procurement services for leading U.S. contractors.
• Financial Profile: $10.1M Revenue, $2.0M EBITDA
• Location: Middle Atlantic
• Advisor Details: Business Broker
• Add-On Rationale: A natural bolt-on for construction services, proptech, or compliance platforms, expanding value-added services and creating cross-sell synergies with contractors and home improvement providers.

Axial Deal Sourcing Strategies Based on PE Fund Size

While Axial’s membership includes PE funds of all sizes, firms do execute different strategies depending on their size:

10-Figure Funds ($1B+ AUM)

These are the largest players in the industry. They typically pursue upper middle market and large-cap deals, focusing on transactions that can absorb significant amounts of capital.

How they use Axial: Primarily for add-on acquisitions, where smaller targets can be folded into existing platforms.

9-Figure Funds ($100M – $999M AUM)

Mid-sized funds pursue a range of deal sizes and often straddle both middle and lower middle market opportunities.

How they use Axial: Mostly for add-ons, while remaining opportunistic for platforms that fit their investment criteria.

8-Figure Funds ($10M – $99M AUM)

Smaller funds, often early in their fund generations, typically focus more heavily on founder-owned and lower middle market businesses.

How they use Axial: Both for add-ons and platforms, as Axial’s coverage aligns directly with the fund sizes and strategies they pursue.

	Platform Deal Size Targets (EBITDA)	Add-On Deal Size Targets (EBITDA)	Platform Sourcing on Axial?	Add-On Sourcing via Axial?
10 Figure Funds	$20M - $50M	$1M - $20M
9 Figure Funds	$10M - $20M	$1M - $10M
8 Figure Funds	$3M - $10M	$1M - $5M

Case Studies from Axial Private Equity Members

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The Sterling Group Expanded Portfolio Company Russell Landscape with Acquisition of Georgia Green

In December 2024, The Sterling Group, a Houston-based private equity firm managing a ten-figure fund, acquired Georgia Green, a Georgia-based commercial landscaping company, through its portfolio company Russell Landscape Group. The acquisition strengthened Russell’s regional presence and operational scale across the Southeast, aligning with Sterling’s focus on investing in and growing industrial service businesses through strategic platform expansion.

Georgia Green was represented by John Marsh of Marsh Creek Advisors, an Axial sell-side member since 2020. The Sterling Group, an Axial member since 2010, pursued the deal on September 10th, 2024. The LOI was executed on November 9th, following a 60-day evaluation period, with the transaction successfully closing just 41 days later, on December 20, 2024.

Sleeping Giant Capital Sourced Rep-Lite via Axial to Anchor Human Capital Platform

Sleeping Giant Capital, an eight-figure PE fund and Axial buyside member since 2021, acquired Rep-Lite, a provider of outsourced commercial and service personnel to life sciences companies, as the first investment in its Human Capital platform.

Woodbridge, an Axial sell-side member since 2010, advised Rep-Lite on the transaction. The company delivers scalable, compliant staffing solutions to medical device, pharmaceutical, and biotech clients, offering an efficient alternative to traditional hiring models.

Sleeping Giant was able to leverage Axial to support its thesis of acquiring operationally resilient, people-centric businesses, identifying Rep-Lite as a strong platform fit. The LOI was executed on November 5, 2024, with Sleeping Giant successfully closing its first Axial-sourced deal 167 days later, on April 21, 2025. 

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Blackstone Connects With Real Estate Broker to Acquire an $18M EBITDA Financial Services Business

Blackstone, a global private equity firm with over 100 portfolio companies, sourced the acquisition of an $18M EBITDA specialty financing provider through an unlikely channel: a Milwaukee-based real estate broker. The deal highlights why Blackstone joined Axial—to bridge the gap between its lower middle market interests and smaller advisors or banks who may not otherwise know who to contact within the firm. Axial enabled that connection, resulting in a successful transaction outside of Blackstone’s typical sourcing networks.

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10-Person Dallas-Based PE Firm Closed 5 Deals in 4 Years

A Dallas-based private equity firm with a team of just ten professionals has closed five transactions through Axial since 2021, targeting lower middle market companies across services, distribution, manufacturing, and tech-enabled sectors. The firm leverages Axial to access a steady pipeline of qualified opportunities that align with its strategy of providing liquidity to founders and supporting long-term growth in scalable businesses.

Trusted by Leading PE Funds Who’ve Successfully Transacted Via Axial

8 Figure Funds	9 Figure Funds	10 Figure Funds