If you research M&A, you’ll find a common statistic: more than half of deals fail. But what does that really mean? It means they fail to meet expectations.
I believe a big part of the problem is that deals aren’t managed well from the start. Brokers focus on EBITDA multiples. Buyers treat acquisitions as project exercises—a checklist of due diligence tasks with the sole goal of getting to closing. But are we looking deep enough?
Let me share a real-world story of a deal I did NOT close on the buy side.
A $32M Disaster Waiting to Happen
Company A had $40M in revenue, with 80% ($32M) tied to a single NASA contract expiring in 18 months. They had $4M in EBITDA, and the brokers were pushing for an 8x multiple—$32M.
Now, let’s put that into perspective:
• The deal would take about six months to close.
• That would leave the buyer only 12 months of guaranteed revenue.
• If the contract wasn’t renewed, $32M in revenue would drop to $8M overnight.
I made an offer: $6M with an earn-out based on contract renewal. If we won the follow-on, the sellers would get more. The advisor called my offer offensive. My response?
"Without us, your client is out of business in two years."
Who was right? Well, let’s just say that company is no longer in business.
Why M&A Deals Fail
Buying that company for $32M would have been insane. The broker didn’t understand how to properly value the business or educate their client, and as a result, the deal collapsed—not just with us, but with everyone.
This is why so many deals fail.
• Sellers are ill-advised and ill-prepared for the realities of their business value.
• Buyers don’t look beyond the numbers to assess risk and long-term viability.
• Brokers push multiples based on anecdotal conversations and blue-sky forecasting, rather than what actually makes sense.
M&A is More Than Just EBITDA Multiples
If you’re looking to sell or buy a business, avoid advisors who focus only on multiples. Valuation is a piece of the equation—but not the only piece.
Successful deals happen when:
✅ The right expectations are set.
✅ Due diligence is used as an integration tool, not just a checklist.
✅ Long-term relationships are built between buyer and seller.
If the only thing a dealmaker cares about is EBITDA, expectations won’t be met—and the deal will fail.
Final Thought
M&A isn’t just about getting to the closing table—it’s about making the right deal. If sellers don’t properly prepare and buyers don’t look beyond the surface, the numbers won’t matter. The deal will fail—just like Company A.