Bumpy deal. Seeking perspective

April 30, 2025
by a searcher from Johns Hopkins University in Melbourne VIC, Australia
I've been working on a deal since July 2024.
Signed a term sheet in Sept.
DD was a nightmare. 1. financials didn't entirely reconcile. 2. Learned how really inadequate the tech is for ops, CRM, financials, etc.
(Broker, an absolute nightmare. Old school bully. Questionable practices.)
Mid-Dec request updated accounts and sales are down 25% in 5 month YTD. Vendor (via broker) attempts to persuade that the business val remains the same and price must remain the same. Further, Broker conveys seller confidence that sales will recover and reach prior year (despite historical data showing lower sales in H2).
Renegotiate in Jan. I attempt to minimize the net change while reflecting new val. I do this by restructuring the offer toward an earnout. Offer accepted.
Deal keeps stalling. Seller refuses to send contract. Insists on me pursuing registration activities that would benefit seller earnout, but not really essential to the transaction.
Sales drop into Q3 (Aus FY). In March, contract arrives with requested updated financials. Not a good story. Sales continued to decline, now clear that earnout won't be achieved.
Seller insists that despite sales drop 9months - YTD nearly 30% and wipeout of profitability, business val is the same, no need to accept reprice.
Obvious on paper that business val is wiped out, but seller refuses to accept.
Unhelpful broker. Hasn't facilitated getting the deal done. Should have been straight forward and doable despite perhaps a volatile seller.
Business still earns $3M+ in sales, though needs $3.5-3.8M to breakeven.
I made a revised offer (dual offer to provide options, 1. based on assets only (current inventory + PPE + goodwill), and 2. small upfront payment at time of sale (reflecting goodwill) + stock paid when sold + earnout. Seller rejected.
Deal doesn't seems salvageable.
After 9 months on the deal, I've got a solid strategy, incorporated, build great relationships and gained industry interest, obtained necessary regs and I have very low overhead. Broadly, I am committed to this sector.
While my plan was to GTM via acquisition (no need to preach to the choir), I'm nearly prepared to go live without an acquisition.
I've requested return of my deposit.
Is there another perspective?
Move on. Transaction is not recoverable?
Time to launch on my own?
Go back to seller?
??
I appreciate your insights.
in Philadelphia, PA, USA
from The University of Chicago in Chicago, IL, USA