Bumpy deal. Seeking perspective

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April 30, 2025

by a searcher from Johns Hopkins University in Melbourne VIC, Australia

I've been working on a deal since July 2024. Signed a term sheet in Sept. DD was a nightmare. 1. financials didn't entirely reconcile. 2. Learned how really inadequate the tech is for ops, CRM, financials, etc. (Broker, an absolute nightmare. Old school bully. Questionable practices.) Mid-Dec request updated accounts and sales are down 25% in 5 month YTD. Vendor (via broker) attempts to persuade that the business val remains the same and price must remain the same. Further, Broker conveys seller confidence that sales will recover and reach prior year (despite historical data showing lower sales in H2). Renegotiate in Jan. I attempt to minimize the net change while reflecting new val. I do this by restructuring the offer toward an earnout. Offer accepted. Deal keeps stalling. Seller refuses to send contract. Insists on me pursuing registration activities that would benefit seller earnout, but not really essential to the transaction. Sales drop into Q3 (Aus FY). In March, contract arrives with requested updated financials. Not a good story. Sales continued to decline, now clear that earnout won't be achieved. Seller insists that despite sales drop 9months - YTD nearly 30% and wipeout of profitability, business val is the same, no need to accept reprice. Obvious on paper that business val is wiped out, but seller refuses to accept. Unhelpful broker. Hasn't facilitated getting the deal done. Should have been straight forward and doable despite perhaps a volatile seller. Business still earns $3M+ in sales, though needs $3.5-3.8M to breakeven. I made a revised offer (dual offer to provide options, 1. based on assets only (current inventory + PPE + goodwill), and 2. small upfront payment at time of sale (reflecting goodwill) + stock paid when sold + earnout. Seller rejected. Deal doesn't seems salvageable. After 9 months on the deal, I've got a solid strategy, incorporated, build great relationships and gained industry interest, obtained necessary regs and I have very low overhead. Broadly, I am committed to this sector. While my plan was to GTM via acquisition (no need to preach to the choir), I'm nearly prepared to go live without an acquisition. I've requested return of my deposit. Is there another perspective? Move on. Transaction is not recoverable? Time to launch on my own? Go back to seller? ?? I appreciate your insights.
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Reply by a searcher
in Philadelphia, PA, USA
Move on. If its this bad now imagine how it will be with the seller after the sale.
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Reply by a professional
from Bentley College in Miami, FL, USA
A few thoughts: Valuation Reality Check: When a business loses 30% of sales and profitability evaporates, any insistence on maintaining the original valuation is untethered from market logic. The seller’s refusal to reprice despite clear financial deterioration likely signals either emotional attachment, denial, or reliance on poor advice from the broker. Earnout Already Unviable: If the business can't meet the earnout thresholds anymore, that tool becomes meaningless. You’ve already shown flexibility and offered creative structures — if those are rejected without counter, it's likely the seller isn’t ready to transact. Your Strategic Positioning: You've already laid important groundwork — incorporation, regulatory approvals, market traction, and industry support. That puts you in a strong position to launch independently and build your own customer base. In some cases, that path offers more control, fewer headaches, and better long-term upside than acquiring a declining business with legacy issues. Walking Away: Nine months is a long time to spend on a deal that no longer makes sense economically. The fact that you're asking for your deposit back is telling. If you're not getting transparency or good-faith engagement, moving on isn't giving up — it's good judgment. Big picture: The transaction doesn’t seem recoverable unless there’s a major shift from the seller. You’ve gained sector insight, built momentum, and reduced overhead. If the acquisition isn’t aligned anymore, launching on your own sounds like the right move — and you’re in a great position to do it. If you pivot and later want to bolt on a small tuck-in acquisition once you're live and growing, platforms like DueDilio can help you vet that next opportunity more efficiently and avoid another grind like this one.
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