19 ways we've seen small business acquisitions fail ("All I want to know is where I'm going to die so I never go there"): 1. Custom manufacturing: work-in-process inventory is nearly impossible to value in diligence, so a seller who misstates each piece's stage of completion can inflate accounting profit before the sale. We know of a business that went bankrupt post-close because of this specific issue. 2. Deferred capex: the seller stops replacing equipment leading up to the sale; EBITDA is inflated, CapEx is understated. You overpay for both, and then have an unexpected cash drain post-close. 3. Amazon: cut PPC before a sale and margins spike, but the organic rank was boosted by that spend and decays once you take over. 4. "Friendly" invoices to affiliated entities pad the trailing twelve months, then vanish after close. 5. The owner's add-back salary isn't money you keep, it's the GM, salesperson, and estimator you now have to hire. 6. Below-market rent in an owner-owned building that isn't appropriately adjusted for in your analysis. 7. Sometimes the owner is the moat: the revenue is tied to his/her relationships, and they leave with him/her. 8. Change-of-control clauses buried in key customer or supplier contracts let them renegotiate or leave after you buy the business. 9. Licenses, bonds, and certifications are often tied to the seller personally and do not transfer. 10. Prepaid annual plans without correct deferred revenue accounting, which sometimes means customers prepaid for work, the seller spent those prepayments, and now you're still on the hook to deliver. 11. Warranty and callback liability on completed jobs lands on you 12 to 24 months later, especially a problem if quality deteriorated pre-close. 12. Sales pulled forward with early orders or a pre-sale promo fake a growth trend that reverses after close. 13. Receivables include very old invoices that were never written down, overstating both earnings and assets. 14. "1099 contractors" who function as employees carry a risk of reclassification. If reversed, you have to deal with back taxes, penalties, and you paid for inflated margins. 15. Customer concentration hides behind multiple PO numbers and sister entities. Roll up by ultimate parent. 16. A year-end balance sheet hides the seasonal cash trough where you cannot make payroll. 17. The Google reviews, ad accounts, pixel, and domain may live in the owner's personal logins and never transfer. 18. The risk the seller has known for six months but didn't mention: the anchor client leaving, the key supplier raising rates. 19. Auto shops, dry cleaners, and gas stations can carry environmental risks that pierce the corporate veil and can leave you personally liable for issues. Hit me with #20 :)