I build sourcing maps for healthcare deal teams. The last few months it has been pain management in South Carolina, dental nationally, primary care in California, ambulatory infusion in Texas, and a handful of other specialty verticals. The pattern that holds across every one of those engagements is the same - and it is not about the tools, the sequence, or the headcount on the BD team.
It is about what gets built between the raw target list and the first phone call.
Jonathan Babcock at Compass Equity Group recently walked through his team’s sourcing process on the Deal Sourcery podcast. 700 conversations a year. 13-step outreach sequence. 80% direct calls.
He said something most people skipped past:
“From the onset of that 13-step process, it’s conveying credibility, domain knowledge, the depth of all the research that we’ve done – showing them it’s worth taking 15 minutes out of their day.”
Those tools give you a company name and a phone number. They do not give you credibility, domain knowledge, or depth of research. That part comes from work that happens before the first touch.
Most firms doing healthcare M&A sourcing skip that part.
A PE investor I spoke with recently described his firm’s sourcing setup. They pay a search firm to build target lists, get approval, and run the outreach.
His honest read on it:
“They find good targets. A lot of times they just aren’t able to get engagement out of those targets.”
His best guess on how they build the lists:
“I have no visibility into that. I’m sure they’re trolling CMS.”
That’s the problem in one sentence. CMS plus a target list plus outreach. No intelligence in between.
The firm isn’t broken. It found an add-on that’s closing this week. But the yield is low, the engagement is thin, and the fund can’t tell why because they can’t see the methodology. The SPS Origination Benchmark found the median PE firm covers just 17.6% of its target market deal flow. The other 82% never crosses the desk. That gap is not a tools problem.
The issue isn’t the process. It’s what the process is running on.
Healthcare is the hardest vertical for generic data tools. Four reasons:
The “company” is a medical practice. Grata gives you the practice name and maybe a LinkedIn headcount. It doesn’t give you the number of physicians in the practice, their specialties, partnership structure, or whether the founding partner has trained a successor.
The decision-maker is a physician. Not a professional operator. Physicians care about patient continuity, team preservation, clinical autonomy. The credibility hook that earns a 45-minute call isn’t “we’ve done 14 deals in your space.” It’s knowing the senior partner trained at Cleveland Clinic, built the practice from three physicians to eleven over 15 years, and has watched three PE-backed competitors open in the same geography in the last 12 months. That context isn’t in any subscription.
The valuation requires data no generic tool carries. Payer mix, collections per physician, Medicare vs. commercial concentration, ancillary revenue, RVU proxies. Without these you can’t estimate EBITDA. Without EBITDA, you can’t rank the list. Without ranking, you’re doing equal outreach to tier-one targets and dead ends.
The timing signals are healthcare-specific. The 61-year-old founding partner with no visible successor. A lease expiring in 14 months. Three PE-backed competitors entering the same market in one quarter. These signals exist and they matter. They don’t show up in a Grata filter.
Without the intelligence layer, here’s what actually happens in a Compass-style 13-touch process in healthcare:
Touch 1: cold. Touch 4: still cold. Most people quit at touch 4.
It’s not that 4 isn’t enough. It’s that the first 4 touches didn’t build enough credibility to earn a 5th. There was no signal that you know anything specific about this practice or this physician. No reason to stop and engage.
That’s what Babcock means by conveying credibility. He’s not sending 13 generic follow-ups. He’s sending industry reports, conference references, research materials. He does the validation and refinement work before the first touch. Each contact is informed.
You can’t do that from a CMS pull and an Apollo sequence.
Here is what it looks like on a real target.
I just delivered a sourcing map for a sponsored group going into South Carolina pain management. Fifty practices screened. Twenty in the universe. Nine Tier 1.
From Grata: independent pain management group, two Upstate SC clinics, six physicians per the practice website, revenue range roughly $5M to $8M. That is the screen. That is what most teams take into outreach.
Here is what the intelligence layer surfaced on that same target.
The active physician roster is five MDs, not six. The co-founder passed away in October 2023 - confirmed via the local mortuary obituary. The practice website still lists him thirty-one months later. The stale website is itself an operational drift signal.
The founder is in his early 60s with twenty-eight years of tenure at the practice. He has been bench-building underneath himself: junior partners joined the group in 2006, 2018, and 2021 - the moves a founder makes when planning an exit, not when settling in for another decade.
The 2018 junior partner founded a separate regenerative medicine LLC at the same address in 2023. That is a side-revenue line that will need to be carved out or rolled in. Either way it is on the diligence list before the first LOI.
The practice is plaintiff in a three-year contractual dispute that hit the Alabama Supreme Court in May 2025. Three years of management bandwidth consumed on a vendor fight rarely correlates with a founder who wants to keep grinding for another decade.
The sponsor's two existing Upstate clinics sit two and three miles from this target's two locations. Summit Spine & Joint Centers (Wellspring Capital) recapped in March 2025 and operates in adjacent Spartanburg. Resolve Pain Solutions (Compass Group EP) entered Aiken in March 2026 with an explicit SC expansion mandate. PartnerCare (Shore Capital) has been building density in Western NC sixty miles north.
That target moved from "row 24 on a list" to a top-three pick with a ninety-second opener built before the sponsor's BD lead ever picked up the phone. Lead with the sponsor's Carolinas density build over the last twelve months. Then a succession structure that keeps the founder practicing clinically while the younger MDs take a partnership track. Then offer integration support to close out the vendor litigation. Do not lead with platform multiples. Do not call the five-MD bench small.
The Grata pull put that practice in the middle of a 200-name universe. The intelligence layer put it at the top of the call sheet with the angle, the wedge, and the things not to say.
What the intelligence layer actually contains – for each target in a ranked deliverable:
Who they are: named physicians, NPI-verified count, specialty, training history, career timeline, clinical affiliations.
What their situation is: practice size, ownership structure (independent vs. PE-backed vs. MSO), payer mix, revenue and EBITDA proxies, ancillary service mix.
Why now: succession signals, recent M&A activity in the same geography, market timing pressure from adjacent consolidation, partnership or lease timeline.
How to open: the specific angle most likely to land in the first 90 seconds – not a script, but the context that makes the call feel informed rather than cold.
That’s what makes 13 touches work. Not the cadence. Not the tool. The intelligence going in.
The PE investor I mentioned isn’t going to switch away from his search firm. It runs the process. But he also knows something is missing. He sees a lot of targets and not a lot of conversations. He knows good targets are in the list because one is closing this week. He just can’t get engagement on the others.
The intelligence layer is what unlocks engagement. You get past the gatekeeper and you have 90 seconds. The physician has three other buyers calling them this month. The difference between getting a callback in six months and getting lost in the inbox is whether those 90 seconds felt like someone did their homework or someone ran a sequence.
Babcock frames it as activity vs. productivity. Most sourcing today is activity. The list grows. The touches accumulate. The engagement doesn’t follow.
The firms closing consistently in healthcare aren’t running better sequences. They know something specific about each target before the first call. They’ve done the work the tools don’t do.
If your current process is: filter, approve, outreach - you have distribution. You don’t have intelligence. And in healthcare, without intelligence, you’re spinning.
Want to see what the difference actually looks like?
Reply with one target in your CRM. I’ll send back what I’d put under each of the four reasons for that target. The named physicians. The succession read. The competitor map. The 90-second opener.
No pitch. Just the deliverable so you can see what an informed first touch looks like before you make it.
-Shawn
This newsletter is for informational purposes only and does not constitute investment, legal, or financial advice.