What causes deals to fall through?

February 24, 2026

by a searcher from University of Texas at Austin in Houston, TX, USA

Hey everyone, It seems as though one of the things that causes the search process to take so long is that deals fall through in the process requiring searchers to start all over again. I’m curious to know some common reasons deals fall through to see if there’s a theme (to be able to identify deals likely to fall through earlier). Please share your experiences!

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Reply by a lender
from Touro University in Houston, TX, USA

You gotta keeps your eyes peeled for Red flags. I posted this a while ago on social. Searchers: Bookmark this post if you plan on using SBA 7(a) to finance your acquisition. Here are some Red flags to look out for when reviewing CIMs and dealing with sellers and their brokers: - CIM doesn't use the most 3 years of filed tax returns as a baseline for determining EBITDA/SDE - CIM touts the future with minimal focus on the past - CIM or broker throws historical multi year averages at you - CIM has tons of addbacks but doesn't give insight into the breakdown - Broker/seller provides historical financials and analysis but refuses to provide returns - Broker/seller provides everything but is dragging out the request for the returns - CIM and broker focuses on TTM or YTD activity primarily - Business broker is a jerk (big one 😂) - Business broker insists you provide a bank preapproval (not even sure wtf this is tbh) before they provide ANY information - CIM touts the brokers SBA preapproval letter which is not worth more than its weight in salt. - CIM discusses the SBA preapproval letter and describes how it passed a rigorous process to get the letter. - Business broker holds your LOI hostage until you agree to use their lender - Business broker tells you seller is hands off and business is on autopilot. Rarely true. - If deal fell out of contract, keep those antennas up. Don't believe a broker when they say a deal was a week away from closing but the buyer couldn't come up with the equity injection. Keep in mind these are just Red flags. If there are a couple, dig deeper. If there are too many, it may be time to step away. Have any more to add to the list? There def are plenty more.

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