Deal falling through: Recovering and moving on

searcher profile

October 18, 2023

by a searcher from Columbia University - Columbia Business School in Boston, MA, USA

A deal I had been working on just fell through. After a little over 2 months of diligence, great rapport with the owner and their management team, it became clear that the company (a service business) had inflated margins when compared to its peers.

I identified some adjustments that needed to be made and brought this up with the seller, who didn't accept. It was a hard decision, but I couldn't afford to overpay for the company.

Any advice on moving on from a broken deal? I'm a traditional funded searcher and still have about another year.

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commentor profile
Reply by a searcher
from ESSEC Business School in Torrance, CA, USA
Thanks for the tag ^redacted‌. Like others have mentioned, exit gracefully and continue to maintain good relationship with the seller. I was in a similar situation although I am self funded but I had finances lined up and it was very embarrassing when we called off the deal. But sometimes not doing the deal is a better decision than to overpay and sit with a buyer's remorse.
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Reply by an intermediary
from University of Missouri in Kansas City, MO, USA
Nick, just because the deal died at this time doesn't always mean that is dead dead. I once had a deal die twice within one year and we ultimately closed that deal as the sellers realized that they were not going to get a deal done based on their terms and price expectations. Never burn bridges and check in with them from time to time. Things change and perspectives change. Selling a company is a stressful, emotional, intense process. Many times, sellers' expectations change over time. But, beyond that, in my experience, it often takes looking at anywhere from 30 t0 50 deals to actually get one deal across the finish line. It's counterintuitive that being prepared to spend tons of money can be so damn hard. Sometimes, perseverance pays. Good luck to you.
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