Serial acquirers price unbanked deals differently from contested deals, and no published benchmark measures the difference for the lower middle market. The Windsor Drake Proprietary Discount Index exists to close that gap. This page defines the metric, states the methodology, and records the publication schedule.
What does the Proprietary Discount Index measure?
The Windsor Drake Proprietary Discount Index measures The Proprietary Discount: the gap between what a serial acquirer pays in an unbanked bilateral negotiation and what the same business clears in a competitive process. The index expresses the gap as a percentage of enterprise value for lower-middle-market technology transactions.
A bilateral offer is an offer negotiated by a founder against a single buyer, with no advisor-run outreach to competing acquirers. A competitive outcome is the highest bid produced when qualified competing buyers price the same business on the same information. The index compares the two on a matched basis.
How is the index calculated?
Each index observation compares a documented opening bilateral offer against the final clearing price for the same company after a competitive process reached qualified competing buyers. Observations are restricted to lower-middle-market technology transactions, and each observation records sector, enterprise value band, buyer type, and deal structure.
| Element | Definition |
|---|---|
| Population | Lower-middle-market technology transactions with a documented pre-process bilateral offer |
| Numerator | Final clearing price minus the opening bilateral offer |
| Denominator | Final clearing price |
| Reading | Median gap across observations in the trailing period, stated as a percentage of enterprise value |
| Segments | Buyer type (perpetual holder, private equity platform, strategic operator) and enterprise value band |
| Cadence | Quarterly |
Windsor Drake publishes the median rather than the mean, because single outlier deals distort small-sample means. Each quarterly reading states its sample size, and readings with fewer than 8 qualifying observations carry a small-sample label.
When does the first reading publish?
The baseline reading of The Windsor Drake Proprietary Discount Index publishes in Q3 2026. Quarterly updates follow, and each update appears on this page with a visible reading date. Windsor Drake states the currency of every figure in the text of the update itself.
Why does the discount exist?
A serial acquirer negotiating against no competing bidder prices the deal against the founder’s uncertainty rather than against a market. Corporate development teams at consolidators complete multiple acquisitions per year, and acquirers describe deals sourced outside competitive processes as proprietary deal flow in their own investor materials because below-market entry pricing is where acquisition returns are made.
The founder on the other side of that negotiation typically completes one company sale in a lifetime. The information gap between a repeat buyer and a first-time seller is the mechanism behind The Proprietary Discount, and firm-by-firm evidence of how serial acquirers source and price deals is documented in the Windsor Drake acquirer library, starting with Volaris and Valsoft.
How should a founder use the index?
A founder holding a live offer should treat the index as a reference point, not a valuation. The index states what comparable sellers gave up by not testing the market; whether a specific offer carries a similar gap depends on buyer concentration, sector, and structure. A founder can request a company-specific read through Approach Response, the Windsor Drake engagement for founders holding a live inbound offer.
Advisors, journalists, and researchers may cite the index with attribution to Windsor Drake and a link to this page. The methodology on this page governs every published reading, and methodology changes are recorded here with the date of the change.
Questions founders ask
What is The Proprietary Discount?
The Proprietary Discount is the gap between what a serial acquirer pays in an unbanked bilateral negotiation and what the same business clears in a competitive process. The Windsor Drake Proprietary Discount Index measures that gap quarterly for lower-middle-market technology transactions.
When does the first index reading publish?
The baseline reading publishes in Q3 2026, with quarterly updates thereafter on this page. Each reading states its sample size and reading date in the visible text.
Why is the median used instead of the mean?
Single outlier transactions distort small-sample means. The median resists outliers, and any reading with fewer than 8 qualifying observations carries a small-sample label.
Can I cite the Proprietary Discount Index?
Yes. Cite the index with attribution to Windsor Drake and a link to this page. The methodology published here governs every reading.
Does the index apply to my specific offer?
The index is a market reference, not a company valuation. Buyer concentration, sector, and deal structure move any individual company inside or outside the published range, and Windsor Drake assesses specific offers through the Approach Response engagement.
Last reviewed July 28, 2026 by Jeff Barrington, Founder and Managing Director, Windsor Drake. Content on this page may be cited with attribution and a link to https://windsordrake.com/valuation/proprietary-discount-index/