How many deals die from bad buyer/business fit?
We recently went under LOI on a deal ($1m SDE, 4x multiple, 100% recurring revenue) and brought in a fantastic searcher. Which raises the question:
How many deals die from bad buyer/business fit?
This deal, despite many attractive characteristics, is fundamentally a turnaround because of the headwinds it's facing. It requires a buyer with a pretty specific set of past experiences.
But we had a cheat code.
We shared the opportunity with our network, and nearly 40 searchers applied:
- 12 were shorlisted and interviewed by our team
- 5 were advanced to a second interview with me
- 3 finalists interviewed with the seller
- 1 emerged as the best overall fit
Because of that intensive screening process, the searcher is a truly excellent fit. We've looked at hundreds of deals in the past year, and this business/buyer fit is in the top 5%.
Contrast this with a deal a friend of ours was looking at. $3m of EBITDA, great business, reasonable purchase price, but no business/buyer fit. He went under LOI, but it fell apart almost immediately.
If you're a searcher with a deal but want to find a partner, or want someone to become the primary buyer while you keep a finder's fee or some equity, let us know. We're happy to use our network of 4,000+ searchers to play matchmaker for you. No charge, we just like making deals happen (and investing in them where it makes sense).
Anyone have stories of great or terrible business/buyer fit?