3 Common Reasons Deals Fall Apart

Welcome back to the Mid Market Insider!

Today, we’re looking at why most deals that fall apart have nothing to do with price. Below are 3 common reasons I’ve seen deals fall apart during the past two decads I have spent in M&A.

It’s rare that valuation alone will kill the deal.

There’s a good chance it’s at least 1 of these 3 factors that play in:👇

1. Owner’s Prerogative

Deals require trust, flexibility, and letting go.

If an owner struggles to accept buyer feedback or loosen their grip during the process, deals get harder.

Selling a business is an exercise in trust and letting go.

2. Unrealistic Expectations

The idea that you’ll get your number, your terms, your perfect buyer, and a fairytale transition?

That’s rarely how deals work.

Good deals often come together through cooperation and compromise.

3. Lack of Preparation

Many problems show up in diligence:

• No documentation

• No delegation

• Critical processes stuck inside the owner’s head

Valuation might get all the attention.

But these are 3 key areas that cause deals to blow up.

The good news?

All of them are fixable with the right prep and the right mindset.

Reader Question of The Week

For context, this is a recent section I’ve decided to add. After receiving many questions in my day-to-day as the co-founder of Four Pillars, I wanted to share the most common ones in my newsletter in hopes that it’s valuable to you in some way.

If you have a question you want answered in a future newsletter, please reply directly to this email and I’ll do my best to answer it. Now, onto this week’s question:👇

Q: "What are the best and worst parts of selling to private equity?"

I’ll start with the worst…

Worst: The potential for the loss of company identity. Some buyers will drastically alter the culture and that could be good or bad for employees and other stakeholders.

Best: Post-close liquidity. A challenge I have encountered with numerous individual buyers that have a bought a business is they have enough money to buy the business, but do not have enough to ensure sufficient liquidity post-close.

That’s all for today’s newsletter! Thanks for reading!

📅 Next Week:

Next week, I’ll be sharing why so many owners know they need systems but still avoid putting them in place.

It’s rarely about difficulty… It’s about comfort, habit, and the illusion that “what’s worked so far will keep working.”

Keep building,
Nick

P.S. 

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