Why Do Main Street M&A Deals Bust?

We've closed over 330 lower-middle-market M&A deals since 2022. We reviewed a large set of broken lower-middle-market M&A matters. Different industries, deal sizes, buyers, sellers, and structures. Same outcomes. Here’s how the failures actually break down statistically: 1. Financial Reality Misses (≈35–40%) The single biggest killer. Includes: QoE coming back low EBITDA/SDE overstated Declining or deteriorating financials Customer concentration or lost key customers Working capital/NWC swings that blow up economics Translation: The numbers didn’t support the price. 2. Seller Behavior & Psychology (≈25–30%) Not spreadsheets. Humans. Includes: Seller backed out / changed mind Seller got “heartburn” Unrealistic price expectations Refusal to renegotiate after diligence Withholding information or retrading late Family dynamics (kids taking over, tax fear, emotional attachment) Translation: Seller wasn’t truly ready to sell. 3. Financing & Capital Issues (≈15–20%) Even good deals die without money. Includes: Buyer couldn’t secure debt Lender pulled out Investor / LP funding fell through Seller note structure failed Bank wouldn’t fund post-diligence Translation: Capital stack didn’t hold. 4. Deal Structure & Terms Breakdown (≈10–15%) The “lawyer problems” people love to blame—but usually aren’t. Includes: Working capital disputes Lease guarantees Asset vs. stock flip issues Seller note terms Indemnities, reps, or PA concessions Translation: Risk allocation couldn’t be bridged. 5. Buyer-Side Issues (≈5–10%) Buyers walk too. Includes: Buyer’s business complications Internal disagreements Change in strategy Loss of key employee Buyer silence or disengagement Translation: Buyer lost confidence or capacity. 6. Process / Miscellaneous (≈5%) Noise, but still real. Includes: Broker interference Switching counsel Timing constraints Silent clients Unknown / no explanation Translation: Momentum died. The Big Takeaway Most Main Street deals don’t die because of lawyers. They die because: Financial truth arrives late Sellers aren’t emotionally or economically prepared Capital is fragile Risk isn’t addressed early The best closings happen when: QoE is scoped early Sellers are educated before LOI Financing is pressure-tested Structure is discussed honestly, not aspirationally Curious which category surprises people the most. Where have you seen deals actually fall apart? have you seen deals actually fall apart?