When a valuation comes in below expectations, people often focus on the report. The report becomes the issue.The appraiser becomes the issue.The methodology becomes the issue.The tone becomes the issue. But one of the quiet truths is that the report usually did not create the discomfort. The truth did. The report just made it harder … Continue reading The Report Is Not What Made the Deal Uncomfortable. The Truth Did.

There is a version of deal support that looks solid until you ask one uncomfortable question: What happens if things go even slightly worse than expected? That is where some transactions start to feel much thinner. Because one of the quiet truths is that some deals are called “supportable” only because the structure quietly assumes … Continue reading Some Deals Are “Supported” Only Because Nobody Priced in What Could Go Wrong

There is a category in deal work that deserves a little more suspicion than it often receives: the “one-time” expense. Sometimes it is real. Sometimes it is absolutely appropriate to adjust. But one of the quiet truths is that a surprising number of one-time expenses have a remarkable habit of appearing year after year in … Continue reading A Lot of “One-Time Expenses” Seem to Happen Every Year

There are moments in a transaction when someone reaches for social proof. Not market proof. Not earnings proof. Not valuation proof. Social proof. It usually sounds like this: “Everyone agrees on the number.” “Everybody is aligned.” “We’re all on the same page.” “No one else has had an issue with it.” That is supposed to … Continue reading The More Often Someone Says “Everyone Agrees,” the Less I Care that Everyone Agrees

You hear this all the time in small business acquisitions: “The upside is tremendous.” Maybe. But one of the quiet truths is that what people call upside is often just a promise that the buyer will work harder, longer, and more personally than the seller did. That is not always upside. Sometimes that is just … Continue reading The Buyer’s “Upside” Is Often Just Unpaid Labor in a Nicer Sentence

A spreadsheet can look very professional while still being deeply unserious. That is one of the quiet truths of deal work. Some projections are not really forecasts. They are negotiations in numerical form. You can usually tell by how politely they lean. Revenue rises. Margins improve. Costs behave. Staff integrates smoothly. Customers stay. Capex stays … Continue reading Some Projections Are Not Forecasts. They Are Negotiations Disguised as Spreadsheets.

Whenever someone says, “There are a lot of interested buyers,” it is usually meant to end the debate. It rarely should. Interest is not proof. Activity is not support. And buyer attention is not the same thing as valuation evidence. One of the quiet truths in deal work is that many people use market excitement … Continue reading “There Are a Lot of Interested Buyers…”

Here is one of the less glamorous truths in valuation: If the deal only works before adjusting owner compensation and rent to market levels, there is a good chance it does not really work. Yet this is where many transactions start getting defensive. Because once you normalize those two items, a lot of attractive earnings … Continue reading If the Deal Only Works Before Market Rent and Market Compensation, It Probably Does Not Work

There is nothing wrong with optimism. Deals require optimism. Buying a business without optimism would be almost impossible. But one of the quiet truths is that the most dangerous person in many transactions is not the pessimist, not the critic, and not the appraiser. It is the optimist who has convinced himself he is being … Continue reading The Most Dangerous Person in a Deal Is Not the Skeptic. It Is the Optimist Who Thinks He Is Objective.

Sometimes what people call “market price” is just a number that survived because nobody wanted to challenge it hard enough. That may sound harsh. But I have seen deals where the purchase price was defended with great confidence and very little discipline. The seller wanted it.The buyer accepted it.The broker supported it.The lender was moving.And … Continue reading Sometimes “Market Price” Just Means Several People Agreed to Ignore the Same Risk