Blown-Up Deals: Lessons from the Trenches of ETA

Acquiring a business isn’t just about finding a great deal—it’s about getting to the finish line. And sometimes, despite months of effort, due diligence, and negotiations, deals fall apart. It’s frustrating, but every failed deal provides valuable insights.

Over the past year, I’ve had two acquisitions fall through—one in veterinary services, the other in SaaS. Each deal collapsed for different reasons, but both revealed key lessons about sellers, operators, and deal structure that have reshaped how I approach acquisitions moving forward.

Deal #1: A Veterinary Clinic with No Operator

What Happened?

The deal looked strong on paper—solid revenue, loyal client base, and steady demand. I had financing lined up, and from a strategic standpoint, acquiring a veterinary clinic seemed like a smart move. But two major problems surfaced:

• No Operator to Step In – Finding a strong DVM to take over was nearly impossible. Despite paying a recruiter upfront, I couldn't secure a vet willing to commit to the role. Without a capable operator, the business wasn’t worth pursuing.
• Real Estate Complications – The seller didn’t own the property, meaning the clinic was subject to lease terms I couldn’t control. On top of that, they insisted on a specific valuation that didn’t reflect reality. Their pricing expectations were based on emotion, not what the market would actually bear.

Lesson Learned:

• You can’t force an operator fit—Without the right person to run the business, it’s a non-starter, no matter how good the financials look.
• Seller expectations can sink a deal—If a seller won’t budge on price, and the numbers don’t justify it, walk away.
• Real estate matters more than you think—If you don’t control the property, you’re at the mercy of the landlord. That’s a risk that needs to be addressed early.

Deal #2: A SaaS Business With Fake EBITDA

What Happened?

This niche SaaS company looked great at first—steady MRR, a sticky customer base, and a promising niche. But as I dug into the financials, one issue became glaringly obvious:

• Fake EBITDA Through Addbacks – The company had $0 net income, but through various “adjustments,” they magically arrived at $200K EBITDA. They wanted a 3.5x multiple based on adjusted EBITDA, which was absurd given the true profitability of the business. When I pushed back, they wouldn’t budge.

Lesson Learned:

• Addbacks don’t equal real earnings—If a company is barely breaking even, no amount of “adjustments” can justify a premium valuation.
• Valuation needs to be realistic—If a seller thinks their business is worth more than it is, and refuses to negotiate, there’s no deal to be had.
• Trust the numbers, not the narrative—Some sellers will spin a great story, but if the financials don’t back it up, it’s a hard pass.

Final Takeaways: What I’ll Do Differently

✅ Operators first, deals second – Before getting deep into diligence, I need to identify a strong operator who’s ready to step in. No more scrambling at the last minute.

✅ Valuation alignment up front – If a seller insists on unrealistic pricing, I won’t waste months trying to negotiate. If they won’t budge, it’s a dead deal from the start.

✅ Less reliance on addbacks – A company that needs heavy adjustments to look profitable isn’t a business worth paying a premium for.

✅ Tighter deal timelines – The longer a deal drags, the more chances it has to fall apart. I’m prioritizing speed in negotiations and diligence.

Final Thought: Blown-Up Deals Aren’t Failures—They’re Filters

Every deal that dies is one that wasn’t the right fit. The goal isn’t to force bad deals through—it’s to find the one worth fighting for. Each misstep sharpens the process, the strategy, and the mindset needed to land the right acquisition.

On to the next one.