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

A common pattern when valuations come in low: Buyers don’t challenge the economic reality.They challenge the methodology. They argue multiple selection, capitalization rates, discount rates, adjustments, weightings, comps, assumptions. Sometimes those are fair discussions. But many times, the buyer’s real complaint is simpler: “This result doesn’t match what I want.” If the business truly supports … Continue reading Arguing Methodology Instead of Economics

A valuation isn’t a rubber stamp. It isn’t supposed to “make the deal work.” It’s supposed to answer one question: What is the business worth, based on the economics it has demonstrated? When a valuation comes in below the purchase price, the most revealing thing is the first reaction. Some buyers say:“Okay. What does this … Continue reading The Valuation Isn’t There to Bless the Deal

Some deals don’t get done because they’re bad businesses. They get done because the buyer loves the story. The turnaround story. The rescue story. The “I’ll take it to the next level” story. Stories are powerful. They’re also dangerous. Because stories can turn a valuation into an obstacle instead of a signal. And when a … Continue reading When Buyers Fall in Love With the “Before/After” Story

First-time buyers often believe they can “outwork” risk. They think: “I’ll improve operations.” “I’ll grow sales.” “I’ll modernize marketing.” “I’ll hire better people.” “I’ll fix what the seller didn’t.” Maybe they will. But that’s not the point. The point is this: A plan to improve performance is not the same as proof of historic performance. … Continue reading The Illusion of Control