Anatomy of a Dumb Deal - By Business Buyers

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January 16, 2026

by a professional from University of Southern California - Marshall School of Business in North Palm Beach, FL, USA

Here’s how to buy the wrong business or the right business the wrong way. I’ve seen, this month (and for 30+ years) so much nonsense 🤣, being foisted upon nice people wanting to buy SMBs, which is taking advantage of their limited knowledge, that I’m forced – I SAY FORCED – again, to post this in case anyone is looking on a Friday afternoon 1/16/26: This graphic (from an early edition of the syllabus I give to people attending my Zoom Business Buyer Trainings) hasn’t changed in decades, other than the numbers have gotten bigger. And so has the risk, for business buyers who don’t know how to properly adjust and forecast financial statements and/or cope with the wishful thinking of business sellers. Any comments? Complaints? Praise? 😍
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Reply by a searcher
from University of North Texas in Dallas, TX, USA
Immediate red flag when I see a seller trying to profit off any "potential" growth needed to be achieved by a buyer. I wonder if often these egregious addbacks are pushed by brokers who want to secure a deal with the seller to take it to the market. How do they secure the deal? They tell the seller they can sell it for a higher price than any other broker can. The broker then has to rationalize their price somehow and you then get these red flag addbacks. Of course, then a few things happen, the market either doesn't meet the seller's expectations and the deal sits out on BizBuySell with all the other trash (price does not move), the deal goes under contract with an unsophisticated buyer who then overpays or renegotiates the deal months down the road, or after a few months with no real movement on the market the broker convinces the seller to lower the price to a realistic one then brings in a solid buyer (not stupid enough to overpay) from their inner circle. Given above, it does seem a seller IS incentivized more to be very aggressive with addbacks and why it's so prevalent in the market.
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Reply by a searcher
from Frankfurt School of Finance & Management gGmbH in Frankfurt am Main, Deutschland
The reality is that also in bigger corporate deals the adjusted EBITDA is an area triggering a lot of discussion, that's why a QoE is so important especially if you are not versed in tracing numbers through a general ledger, balance sheet or other reporting.
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