One reason overpriced deals happen is simple: The seller is selling risk. Not intentionally, necessarily—but structurally. If a business has: owner dependency, weak records, deferred maintenance, fragile margins, or inconsistent earnings… the seller has lived with those risks and decided they want out. The moment the buyer closes, those risks transfer. If the buyer overpays … Continue reading The Hidden Transfer: From Seller Risk to Buyer Risk

Brokers play an important role. But when a deal becomes broker-led instead of buyer-led and lender-led, the risk narrative changes. Because broker incentives are not the same as long-term ownership incentives. In forced deals, you’ll hear: “This is standard.” “That’s how it’s done.” “You’re overthinking it.” “Another buyer will take it.” Sometimes those statements are … Continue reading When Brokers Start Driving the Risk Narrative

The most dangerous deals are the ones people describe with urgency: “We have to close by Friday.” “The seller is getting impatient.” “We’re too far in.” “We can’t lose this one.” Urgency compresses thought. Urgency makes people trade diligence for speed.Urgency increases optimism and decreases skepticism. And urgency is often used as a tactic—sometimes intentional, … Continue reading The Deal That “Had to Close” Usually Has the Highest Hidden Risk

Overpaying isn’t just paying more than fair market value. It’s agreeing to a higher burden the business must carry after closing. That burden shows up as: thinner coverage, reduced ability to reinvest, less tolerance for volatility, and more fragility during downturns. The buyer thinks they’re buying upside. But what they often buy is a tighter … Continue reading The Post-Close “Premium Tax”

It starts with “just this one deal.” A minor exception. A small stretch. A tweak. Then it happens again. And before long, exceptions become standard operating procedure—because the organization learns something: If we push hard enough, the deal gets done. This is how underwriting culture drifts.This is how diligence standards erode.This is how the market … Continue reading When Exceptions Become the Business Model

In forced deals, you’ll hear a lot of soft language: “We’re comfortable.” “We understand the risks.” “The buyer has a plan.” “It should work.” Comfort is not mitigation. Mitigation is specific: What risk are we taking? What is the plan? What will it cost? How long will it take? What happens if the plan fails? … Continue reading “We’re Comfortable” Is Often a Substitute for Real Mitigation

When a valuation comes in below price, you learn a lot by what happens next. A disciplined group says:“Okay. What does this tell us about pricing and risk?” A motivated group says:“Okay. How do we get this to support the price?” Once the valuation gap is treated as a “problem to solve,” it stops being … Continue reading The Valuation Gap Becomes a “Problem to Solve,” Not a Signal to Respect

“Moral hazard” sounds dramatic, but most of the time it’s not malicious. It’s a simple reality: When the people making decisions don’t bear the full cost of the downside, the decision-making changes. If a broker gets paid at closing, their economic incentive is the closing.If a seller exits at closing, their risk ends at closing.If … Continue reading Moral Hazard in Deals Isn’t Evil. It’s Incentives

Some deals close with universal smiles. Buyer gets the keys. Seller gets paid. Broker gets the fee. Lender gets the loan booked. And the problem is… that is not the same thing as a good deal. Because a closing can be engineered even when the economics are weak. You can negotiate terms, stretch assumptions, layer … Continue reading When Everyone Wins at Closing, Someone Usually Loses Later

Let me say it plainly: The moment a buyer needs the valuation to support the purchase price, the deal has shifted from analysis to attachment. And attachment is where risk hides. A valuation isn’t a hurdle.It’s a signal. If the business is worth less than the price, the conclusion isn’t “fix the valuation.” The conclusion … Continue reading The Moment You Need the Valuation to Work, the Deal Has a Risk Problem