ProxDeal for search funds

In recent years, search funds have established themselves as an exciting form of private equity investment – with the particular strength of combining entrepreneurial commitment with systematic investment strategies. Their focus on smaller, often overlooked companies opens up access to value-creation potential that would otherwise remain hidden. However, identifying suitable companies of this kind at an early stage is often difficult. This is exactly where ProxDeal comes in.

The conventional process

Traditionally, a search fund builds its deal flow through personal networks, referrals, direct outreach and publicly available company data. Database searches, contacts with industry insiders, extensive desk research and cold calling involve a great deal of manual work and demand considerable time, patience and dedication.

Another problem is that many attractive targets are not fully covered by conventional databases, or their data is out of date – especially family-run SMEs and so-called “hidden champions”. Limited data availability and growing competition for the few companies officially on the market not only make target selection harder but also drive up company valuations, putting the profitability of many deals at risk.

How ProxDeal transforms the search

ProxDeal complements the conventional approach with a structured, technology-supported method based on AI-powered content analysis and up-to-date data. The concept is built on writing a detailed short description of the target you are looking for, from which a longlist of matching companies is generated. With this content-based strategy, countless websites are searched for relevant information within a very short time – rather than working through industry codes or standard lists. AI agents evaluate all available content automatically, using daily-updated data and drawing on Germany’s largest database.

The search focuses on thematically relevant content – that is, the products and services specified in the short description. You can also enter the websites of comparable companies to make the research even more targeted. The results prioritise companies with a similar content fit, and selected filters produce a longlist that is not only structured but also transparent and easy to review.

You can then create a shortlist from the longlist and launch personalised outreach straight away – significantly accelerating the classic deal-sourcing process. Reliable longlists also let you test existing investment hypotheses early, and the AI-based search further reduces cognitive biases in the selection process.

Benefits for search funds

Precise, tailored search profiles

A key advantage is the ability to set up very specific, tailored search profiles and define exclusion criteria. Company websites are not analysed generically but on the basis of their actual content – each block of text is analysed individually, so the best results are identified in the specific context of the mandate. ProxDeal also supplements the content-based list with essential additional data such as legal form, publicly available shareholder data and a clear company description. Key financial data, such as total assets, is compiled directly from reliable sources like annual financial statements and commercial register (Handelsregister) extracts.

Succession signals and age profiles

A distinctive feature is that ProxDeal takes age profiles into account: business owners aged 55 and over often benefit from tax advantages when selling, which makes it possible to identify companies facing succession early. Different types of data can be combined to predict high succession probabilities – for example, when the managing director is also the sole shareholder and over 55, and there is no authorised signatory (Prokurist) with the same surname. This combination of several factors, and the probability of an external business succession derived from it, provides an insight that no other application offers in this form.

Proprietary deal flow

A particular strategic advantage lies in the ability to deliberately increase your “proprietary deal flow” – in other words, gaining more access to acquisition opportunities that are sourced directly, without competition from other buyers. AI-powered market research can identify such potential targets early, before they ever enter a traditional sale process. For search funds, this means transactions can be initiated early, which not only increases the probability of success but also opens up the chance of more attractive valuations.

Outreach automation

Another practical advantage comes from the integrated outreach automation: it lets you contact a large number of relevant companies quickly and easily. Mail merge letters or emails can be highly personalised and tailored to your corporate design. Flexible selection from the longlists and shortlists you have created, together with the option to adjust subject lines, copy, logos and signatures, makes the entire contact process considerably more time-efficient and professional.

Sell-side use

ProxDeal’s advantages are not limited to the buy-side: the AI search can also be used on the sell-side – for example in acquisitions or when preparing an exit – to identify potential acquirers. This is particularly helpful when preparing confidential transaction processes, as relevant counterparties can be systematically identified and prioritised on the basis of specific company content.

Conclusion

For search funds, a well-founded, focused and scalable search for suitable acquisition targets is a decisive success factor. ProxDeal offers a clear alternative to traditional research: with a content-based search and the ability to discover valuable transactions ahead of the competition, longlist creation reaches a new level of quality. Instead of time-consuming database screening, ProxDeal lets you identify relevant companies faster – in both buy-side and sell-side searches. This turns traditional manual research into a low-effort, data-driven process – substantially more effective and faster.

Frequently asked questions