If you’ve been searching for a business to acquire for any length of time, you’ve probably realized by now: deals fall apart all the time. 

The question on top of every buyer’s mind is: why do deals fail, and more importantly, how can I avoid the common pitfalls? 

To fully answer that, I want to go back to the beginning. When you understand more of my story, you’ll quickly understand why.

But who am I and what experience do I have to answer this question? I’m Walker Deibel, author of the Wall Street Journal bestseller Buy Then Build and creator of the Acquisition Lab.

 

 

I’ve acquired 10 companies outright, been in the trenches as a business owner and brokering hundreds of deals, and I’ve seen deals go sideways for all kinds of reasons.

When I first started looking for a business to acquire in 2004, I had no idea how unconventional this was. I bought my first business in 2006 – $8 million in revenue, just under 50 employees – and ran it as CEO for seven years before selling it in 2013. Between 2013 and 2016, I acquired another six companies, then added two more between 2016 and 2023.

Throughout that time, I was part of various entrepreneur networks, and here’s what I found: entrepreneurship back then wasn’t about buying businesses – it was about Silicon Valley, venture capital, and startups. You might find that hard to believe now, looking at the small business acquisition landscape, but then, everything was about building from scratch, and nobody was talking about acquiring existing businesses. Even my MBA professors told me it was a bad idea.

I felt completely isolated.

I remember being at a party, introduced by another entrepreneur as, “This is Walker, he buys and sells companies.” And while I appreciated the intro, I felt like saying, “No, I’m an entrepreneur, just like you.” But the reality was, these entrepreneurs didn’t understand what I was doing and likely wondered if I hadn’t started a business from scratch, could I really call myself an entrepreneur? 

Realizing I was swimming in a blue ocean, that’s when I decided to write Buy Then Build.

 

 

My lofty goal was to create the Good to Great of acquisition entrepreneurship, but the differences between me and Jim Collins quickly became apparent. Collins had 24 PhDs on staff researching what makes companies great.

So instead of taking a research approach, I decided to simply conduct interviews with people who had acquired businesses. Although I assumed I’d get a lot of similar answers regarding people’s experiences buying businesses, I was surprised to learn that everyone had different answers – alluding to vastly different experiences buying businesses.

This is what I concluded: Small business buying was a fragmented and opaque space. There were no best practices. No playbook. Just a lot of people figuring it out on their own. 

To make business buying more accessible to those looking to grow their wealth, what we needed weren’t “best practices” but frameworks – ways to analyze deals and extract value. So I wrote a book that was part theoretical framework, part real-world experience.

Seven drafts later, I got a call from my editor. He said, “Walker, I’m confused. Are you trying to sell this idea or prevent people from doing it?”

Evidently I leaned a little too hard on the caution that buying a business would not be easy.

“Look,” I told him, “This is hard work. It’s risky. People need to go into this with their eyes wide open.”

He responded, “No. We’re pulling all that out. You need to sell this idea.”

This was hard for me. Even after the book was finished, I delayed the launch for nearly a year because I was uncomfortable with the idea that someone might actually take my advice.

What if someone read it and actually bought a business?

That’s crazy, right? I didn’t want to be responsible for that.

But then I had a realization: buying a business is a capital asset class like any other. It’s no more irresponsible to write about business acquisition than it is to write about real estate investing, stocks, or startups.

Shortly after making this realization, I went to market, targeting successful entrepreneurs who had the intelligence, drive, and commitment to execute.

Buy Then Build took off.

It ignited a movement, and like with many movements, the underlying message started to get skewed.

The message went from “acquiring businesses is a great path for the right people” to “everyone should quit their job and buy a business.” 😨

That’s just wrong. Acquisition entrepreneurship is NOT for everyone. It’s for competent entrepreneurs who can actually run a business.

At one point, a marketing agency I hired ran an ad that said, “Even janitors can buy a business.” I shut that down immediately. As catchy as the message was, I wasn’t willing to gloss over the truth of acquisition entrepreneurship to make a quick buck.

So, back to the original question: why do deals fail?

When I first started buying businesses, I thought the biggest challenge would be finding the right one.

What I didn’t realize at the time was how many deals don’t close – often for reasons that have nothing to do with the business itself.

As I acquired more businesses, I saw more patterns that drove the inefficiencies and dysfunction of the business buying landscape.

It wasn’t just that buyers struggled to find good businesses – it was that the entire system was flawed. A completely unregulated marketplace. Brokers who don’t know what they’re doing. Buyers chasing the wrong things.

Ultimately, deals fail for one of three reasons: bad deals, bad brokers, or bad buyers.

 

Bad Deals

The reality is, the entire sub-$25 million market is completely unregulated. There’s no SEC oversight, and in some states, the only requirement for business brokers is a real estate license – something that has nothing to do with M&A.

Not only is the landscape unregulated, but the deals themselves can often be pretty shoddy.

Many small business owners don’t have clean financials and may intentionally or unintentionally overinflate the merits of the business.

 

Source: Financial Optics

 

Because of that, buyers don’t uncover critical issues until late in the process. It’s a chaotic environment, and without proper documentation, such as years of financial history and standard operating procedures (SOPs) to enable the buyer to take over the business with ease, deals collapse under their own weight.

 

Bad Brokers

Unfortunately, most business brokers are terrible and don’t truly add value to the deal-making process. Their model relies on listing a bunch of businesses and hoping some will sell, fully knowing that most will not.

Axial released a report breaking down how brokers spend their time, and what I found fascinating was that most of them don’t invest time in properly packaging businesses for sale.

 

 

Business brokers often fail to dedicate the necessary time to assembling a comprehensive Confidential Information Memorandum (CIM) – the document that gives potential buyers a clear overview of the company. An effective CIM should include: company history, sales process, team structure, growth opportunities, industry outlook, overview of IP and company assets, and financials.

When brokers skip this step or sellers rush the process, buyers are left to uncover gaps and inconsistencies on their own – often at a critical stage in negotiations. By that point, the deal is already at risk of falling apart.

This lack of preparedness isn’t just an oversight – it’s a systemic issue. 

M&A advisors often spend minimal time on the preparation phase of a deal, instead prioritizing buyer interactions, due diligence, and deal execution. But neglecting the early stages of the process can have major consequences down the line.

As much as I respect my fellow brokers, the reality is that this market is unregulated, and the quality of work varies widely. One of the biggest reasons businesses fail to sell is a poorly prepared CIM – and it’s something we can and must improve.

If you’re selling your business, don’t cut corners here. Make sure you and your broker invest the time and effort to create a strong, well-structured CIM. Your bank account will thank you on closing day.

 

Bad Buyers

Now, this is the big one.

At one of the largest business broker conferences in history, I posed the question, “What makes a bad buyer?”

It wasn’t an understatement to say the floodgates opened. Brokers started shouting and pitchforks practically came out, but once the dust (and crowds) settled, I noticed very similar patterns to what I’ve personally seen time and time again.

 

 

Bad buyers waste brokers’ time, don’t understand deal terms, and often don’t even know what they’re looking for.

They drag out negotiations, disappear mid-deal, and submit offers that aren’t financeable.

One buyer I worked with insisted on an extended exclusivity period, and when I finally caved, he vanished for ten days.

Why? Turns out, he was on a Disney cruise and claimed he “didn’t buy the internet package.”

It would have been fine in the end if that deal closed, but of course it didn’t – and we lost all momentum.

 

 

Then there are the ones who interrogate sellers, ask to meet employees before closing, or demand way too much information pre-LOI.

Worse, they’re chasing unicorns – zero money down, no out-of-pocket costs – or they throw around terms like search fund without actually understanding how the model works.

And where does this misinformation come from? Social media. The bane of my existence. But at the same time, I know how to navigate it, and there’s an opportunity for those who can see through the noise.

 

Most People Don’t End Up Buying Businesses

Here’s the reality: 90% of people who start looking for a business never actually buy one.

Think about that. Nine out of ten.

And yet, people think competition is the problem. It’s not. If you stick with it, you’re already ahead of most buyers.

There’s a Hollywood effect at play here. You know how in Hollywood, the first rule of making it is just sticking around long enough for everyone else to quit? Business acquisition works the same way. If you stay in the game while others drop out, you’ll eventually land a great deal.

The key to succeeding in business acquisition is understanding why deals fail and structuring your approach accordingly. The buyers who win are the ones who:

• Understand how to assess deal quality.
• Recognize that weak brokers create hidden opportunities.
• Approach deals with professionalism and clarity.

The best deals don’t always look great at first glance. They take work. But for those who put in the effort, the rewards are worth it.

If you want to be in the 10% who actually close a deal, you need to understand the game. That’s what we teach inside the Acquisition Lab – how to navigate this landscape with confidence and skill.

Let’s make sure you don’t become one of the 90% who never buy.

Ready to acquire a business in the next 12 months? The Acquisition Lab is your first stop. Reach out to us today and get on the fast track to becoming an acquisition entrepreneur.