Here’s a risk dynamic people underestimate: Optimism compresses time. Buyers assume improvements will happen quickly. But businesses rarely change on buyer timelines. Hiring takes longer.Training takes longer.Customer behavior changes slowly.Competitors react.Costs don’t stay still. When the valuation doesn’t support the price, “we’ll improve it” becomes the bridge. But bridges require engineering. Not hope.

Many small business deals skip meaningful quality of earnings work. Sometimes that’s fine. But when the valuation comes in low and everyone starts searching for adjustments… that’s exactly when earnings quality matters most. Because without clean, reliable earnings, you’re negotiating with fog. Buyers may be emotionally ready to own the business. But the numbers may … Continue reading The Quiet Cost of Ignoring Quality of Earnings

Many buyers are driven people. That drive is what got them to the table. But drive can morph into stubbornness when reality shows up. If someone is used to solving problems through effort, they start believing every risk can be solved through effort too. That’s not always true. Some risks are structural, not operational. And … Continue reading The Buyer’s Best Trait Can Become Their Worst Enemy

Emotionally attached deals have a pattern: Red flags get renamed. “Weak financials” becomes “opportunity.” “Owner dependency” becomes “I’ll hire someone.” “No systems” becomes “we’ll modernize.” “Declining revenue” becomes “temporary.” Rebranding is not mitigation. Risk needs a plan, a cost, and a timeline. Otherwise, it’s just optimism.

Real due diligence is uncomfortable. It forces you to confront: weak records, inconsistent margins, customer concentration, deferred capex, workforce risk, owner dependency. But when the buyer is emotionally invested, diligence becomes something else: A formality. A box-checking exercise. Because the buyer isn’t looking for reasons to walk away.They’re looking for reasons to keep going. That’s … Continue reading Due Diligence Becomes Sloppy When the Outcome Is Pre-Decided

When a valuation comes in low, one of the first thoughts is: “Let’s get another one.” Sometimes a second opinion is reasonable. But often, this is just shopping for a conclusion. And if the strategy becomes “keep going until someone says yes,” that’s not due diligence. That’s denial with paperwork.

Some purchase price conflicts are technical. But many are emotional. When a buyer suddenly becomes interested in enterprise vs. equity distinctions only after a valuation comes in low… that’s not curiosity. That’s a pressure response. The buyer is trying to find a “math door” that leads back to the number they already chose. And lenders … Continue reading Enterprise Value vs. Equity Value Confusion Isn’t Always a Mistake

One of the most dangerous sentences I hear: “We’ll just grow into the price.” Sometimes businesses do grow. But when that sentence is used to justify a valuation gap, it’s often code for: “We’re comfortable paying for earnings that don’t exist yet.” That is a gamble—not a valuation. Calculated risk is fine. Unpriced risk is … Continue reading The Most Dangerous Sentence in a Deal

I’ve heard people say: “That valuation killed the deal.” Usually, that’s not accurate. The valuation didn’t kill it. The business’s ability to support the price killed it. The valuation just said it out loud. And in lending contexts, that distinction matters. Because you don’t want a deal that only survives if everyone agrees to ignore … Continue reading The Valuation Doesn’t Kill Deals. Weak Economics Do.

When buyers need the valuation to hit the number, you start seeing a specific kind of thinking: “Let’s add back this.”“And this.”“And this too.” Some addbacks are legitimate. But the behavior I’m talking about is different. It’s not normalization—it’s engineering. It’s the belief that if you adjust enough things, the business will become worth more. … Continue reading The “Just Add Back” Mentality