The Hidden Costs of Building Target Lists In-House

Private equity firms are built to evaluate, execute, and grow investments, not to spend weeks building M&A target lists from scratch. Yet many firms still task associates or analysts with piecing together these lists internally, hoping it saves costs or ensures control over the process.

In practice, it rarely works that way. Building quality target lists in-house often consumes disproportionate time and resources while producing outputs that still fall short of what is needed for effective sourcing.

Time Spent on Research Is Not Time Spent on Deals

Every hour an associate spends scouring websites, LinkedIn, or fragmented databases is an hour not spent analyzing financials, meeting management teams, or running the investment process.

Junior team members at PE firms are highly capable, but their time is most valuable when applied to diligence, modeling, or portfolio work, not cleaning data or verifying company ownership. Outsourcing this labor-intensive task to a research specialist like Agathon frees your team to focus on what drives returns.

In-House Lists Often Lack Depth

Associates typically have access to the same tools such as databases, broker lists, or scraping scripts that everyone else in the industry uses. The result is often a surface level list that misses nuances:

·      What does each company really do beyond a generic description?

·      Who actually owns it, and is it acquirable?

·      Which companies overlap or fall outside of scope?

These gaps mean in-house lists still require validation before they can be used in outreach or shared with intermediaries. By contrast, Agathon’s lists are built from scratch, structured to be actionable, and verified for accuracy.

The Cost Argument Does Not Hold Up

On paper, assigning a junior analyst to build a target list might feel cost effective. In reality, the hidden costs add up:

·      Weeks of analyst time diverted from higher value work

·      Lists that need ongoing updates or re-work

·      Missed opportunities if key targets are overlooked

Let’s put numbers behind this. What does it actually cost to build one actionable target list in-house from scratch?

·      Analyst Hourly Cost: Using a conservative estimate of $30/hour.

·      Time Required: Building a complete, actionable list (market mapping, ownership checks, and verification) can easily take ~100 hours.

·      Labor Cost: ~100 hours × ~$30/hour = ~$3,000 in direct labor.

·      Database/Tool Costs: Platforms like PitchBook cost $12,000–$25,000 per seat annually. Spread across multiple projects, that works out to roughly $500–$1,000 per list.

·      Opportunity Cost: The biggest hidden cost comes from diverting analysts away from modeling, diligence, and live deal execution. That lost value compounds quickly.

This isn’t trivial for a deliverable that may still need cleanup or further validation, and it comes at the expense of the very talent you hired to drive deal flow.

Agathon operates on a fixed, transparent model. Firms receive exclusive, ready to use deliverables without draining internal bandwidth or risking incomplete coverage.

Better Outcomes with a Research Partner

The real value lies not just in having a list, but in having a clear, complete, and exclusive market view:

·      Proprietary sourcing becomes sharper because you are engaging companies others may have missed

·      Intermediary conversations improve when you can say, “We have already mapped this space. What else can you bring?”

·      Expert networks become more effective when guided by a structured list of relevant companies

This is what Agathon delivers: depth, clarity, and exclusivity, so your team can focus on execution, not administration.

Final Thoughts

Private equity firms can build target lists in house. But just because they can does not mean they should. The opportunity cost, depth limitations, and inefficiencies outweigh any perceived savings.

Agathon Research Partners exists to bridge that gap. By outsourcing the heavy lifting of market mapping and target list creation, firms gain sharper insights, preserve internal bandwidth, and position themselves to source and close better deals.

If your team is debating whether to keep building lists in house, it might be time to explore a smarter, more efficient alternative. I would be glad to discuss how Agathon can help. yash@agathonrp.com