Deal-Making Walk-Away Framework

A framework for successfully navigating M&A deals and understanding common pitfalls in deal-making. Based on experiences from successful entrepreneurs.

Core Deal-Making Principles

• Assume every deal will fall through - "birds fly, fish swim, and deals fall through"
• Expect 2 walk-away moments before any successful deal closes
• Apply a 50% discount to early offers that haven't gone through diligence
• Disclose potential deal-breakers upfront to build trust and save time

Big Company vs Small Company Dynamics

Large Public Companies

• Less likely to "retrade" (renegotiate terms late in process)
• More bureaucratic approval processes
• Deal failure reflects poorly on internal stakeholders
• More likely to follow through once committed

Small Companies/Individuals

• More likely to nickel and dime during negotiations
• May have ulterior motives (learning about business)
• Higher risk of deal falling through
• More emotional decision making

Best Practices for Sellers

• Disclose problems early in the process

  • Builds trust with buyers
  • Saves time by identifying deal-breakers early
  • Allows for faster deal completion
  • Prevents late-stage surprises

• Consider deal progress when evaluating offers

  • Later-stage deals with more diligence completed are more valuable
  • Early exciting offers need significant discounting
  • Factor in time and effort already invested

• Maintain emotional detachment

  • Need "bulletproof mindset" before entering M&A
  • Can't develop thick skin during the process
  • Accept that deals falling through is normal

Red Flags and Warning Signs

• Buyers moving too quickly without proper diligence
• Early high offers without detailed examination
• Lack of internal approvals/stakeholder buy-in
• Unclear decision-making process
• Constantly changing terms or requirements