The Tale of Two Deals

I've been fortunate in my career to have been on both sides of the table in SMB acquisitions, and I’ve witnessed up close what information asymmetry looks and feels like. And I’ve had recent personal experience with two SaaS deals I was evaluating. In the first, the broker represented less than 1% churn, 98% gross margins, and a $2M valuation verified by an independent third party. Clean story. Retiring sellers. COO wanted to stay on. It was in the EdTech space and looked ideal on paper. I was jazzed. But when I dug into the data, the picture was different. Nearly 30% customer churn across three years. Revenue declining from $1.3M to $1M. Misclassified COGS that reduced gross margins to 85%. $150K in advertising spend producing less than $100K in new sales. The COO's actual title was VP of Sales and Marketing, but his efforts weren't moving the needle. The seller had stopped taking a salary and was infusing the business with personal cash to meet a payroll that had declined 50%. The company was worth maybe $900K. The seller wouldn't budge from $2M. Neither of us got what we wanted. The second deal is still alive. Stable 20-yo business, seller asking $2M, genuine operational turnaround story. The current owner transformed negative $250K EBITDA to positive $130K over five years. Real work, real results. But MRR has been declining for 22 months, driven by a discount program attracting the wrong customers and suppressing close rates on new business. My analysis put fair value at $1.1M–$1.3M. When I showed the seller the top-line problem, he didn't walk away. He asked to work toward a mutually acceptable EV. That conversation is ongoing. I’m optimistic. Same information asymmetry problem. Two completely different outcomes. The difference wasn't the quality of the business or the character of the seller. It was whether both sides could look at the same analysis and have an honest conversation about value. The silver tsunami is going to produce thousands of these moments over the next decade. Boomer owners who built something real, who believe in what they built, who deserve a fair exit, and buyers who need confidence that what they're buying is sustainable at the asking price. Most of those conversations are going to go the way of the first deal. A shared frame for value changes that math. What's the hardest valuation conversation you've had with a seller — and what made the difference?