A deal that died
The buyer walked in week five.
The offer was $24M, at 5.9x profit, from a private equity buyer. It never became a signed deal. In week five of diligence, the buyer walked.
The numbers were fine. That was never the problem. The problem was what the numbers could not show, and what the buyer found the moment they started talking to the team.
The buyer ran interviews. They asked the people around the owner simple questions. Who owns the vendor relationships? The owner. Whose name is on the big customer contracts? The owner's. Who knows how pricing actually works? The owner. Every important thread in the business ran back to one person, and that person was the one trying to leave.
A private equity buyer is not buying a job. They are buying a business that keeps running after the owner is gone. In the interviews, they heard the opposite. This was not a company with an owner on top. It was an owner with a company underneath. Take the owner out and the vendor deals, the customer relationships, and the pricing knowledge all left with him.
So they walked. Not angrily. They had seen it before. They simply decided the business would not hand over cleanly, and no price fixes that. You cannot buy a business that cannot be separated from its owner. You can only rent the owner, and he was not for rent; he wanted out.
Here is the part that stings. None of this showed up in the financials. The revenue was real, the margins were fine, the growth was there. Key-person dependency does not live in the numbers. It lives in the answers your team gives when a stranger asks who really runs the place, and it comes out fast in an interview.
The owner is going back to market. He is spending 18 months first, bringing a COO up to speed and moving the customer relationships off himself and onto the company. That is the only fix. It is slow, and it had to start long before the buyer ever called.
You cannot see key-person dependency in the numbers. You see it in fifteen seconds when a buyer asks your team who really runs the place. If every answer is your name, the buyer is not buying a business; they are buying you, and you are the one thing not for sale. The fix is a real second-in-command, and it takes years, not weeks.