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💡 𝐖𝐡𝐲 𝐈𝐧𝐯𝐞𝐬𝐭𝐨𝐫𝐬 𝐖𝐚𝐥𝐤 𝐀𝐰𝐚𝐲 𝐟𝐫𝐨𝐦 𝐃𝐞𝐚𝐥𝐬 𝐚𝐭 𝐭𝐡𝐞 𝐋𝐚𝐬𝐭 𝐌𝐢𝐧𝐮𝐭𝐞 - 7 Key points to keep in mind. You’ve done everything right—pitched your heart out, gone through all the due diligence, and the investor seemed ready to sign. Then, at the last moment, they walk away. Here’s the real reason behind it, and trust me—it’s not always about the numbers. 1. 𝐋𝐚𝐜𝐤 𝐨𝐟 𝐓𝐫𝐮𝐬𝐭 𝐢𝐧 𝐄𝐱𝐞𝐜𝐮𝐭𝐢𝐨𝐧 The biggest deal breaker isn’t your product or market; it’s the fear that you won’t be able to execute the plan. Investors may love your vision, but if they sense even a hint of uncertainty about your ability to turn that vision into reality, they’ll walk. Show them not just what you’ll do, but how you’ll do it. 2. 𝐎𝐯𝐞𝐫𝐜𝐨𝐧𝐟𝐢𝐝𝐞𝐧𝐜𝐞 𝐖𝐢𝐭𝐡𝐨𝐮𝐭 𝐄𝐯𝐢𝐝𝐞𝐧𝐜𝐞 Confidence is essential, but when it turns into arrogance without data to back it up, investors get spooked. If you're projecting 10x growth but can’t explain the math behind it, they’ll lose faith. Investors want confident, realistic founders who can prove their assumptions. 3. 𝐌𝐢𝐬𝐚𝐥𝐢𝐠𝐧𝐦𝐞𝐧𝐭 𝐢𝐧 𝐄𝐱𝐩𝐞𝐜𝐭𝐚𝐭𝐢𝐨𝐧𝐬 Many deals fall through because founders and investors aren’t on the same page about key factors: exit timelines, control, and the pace of growth. If your vision for the business doesn’t align with what the investor wants, no matter how strong the deal seems, they’ll walk away. Be crystal clear about expectations upfront. 4. 𝐑𝐞𝐝 𝐅𝐥𝐚𝐠𝐬 𝐢𝐧 𝐃𝐮𝐞 𝐃𝐢𝐥𝐢𝐠𝐞𝐧𝐜𝐞 The financials may look fine on the surface, but if investors find inconsistencies during due diligence—whether it’s a messy cap table, unresolved legal issues, or unclear ownership structures—they’ll bail. Transparency is everything. Make sure your house is in order before you get to this stage. 5. 𝐓𝐡𝐞 𝐓𝐞𝐚𝐦 𝐈𝐬𝐧’𝐭 𝐒𝐭𝐫𝐨𝐧𝐠 𝐄𝐧𝐨𝐮𝐠𝐡 Investors invest in people as much as they do in products. If they sense that the team isn’t capable of scaling or doesn’t complement the founder’s skills, they’ll hesitate. A solid team that can cover all operational areas is critical to closing the deal. 6. 𝐅𝐞𝐚𝐫 𝐨𝐟 𝐂𝐨𝐦𝐦𝐢𝐭𝐦𝐞𝐧𝐭 Investors are human too, and sometimes they get cold feet. If they see risk piling up—market changes, new competitors, or even a sense that the startup is moving too fast—they might back out. Keep the communication flowing and address their concerns before they turn into deal-breakers. 7. 𝐘𝐨𝐮 𝐃𝐢𝐝𝐧’𝐭 𝐒𝐭𝐚𝐧𝐝 𝐎𝐮𝐭 𝐟𝐫𝐨𝐦 𝐭𝐡𝐞 𝐂𝐨𝐦𝐩𝐞𝐭𝐢𝐭𝐢𝐨𝐧 Sometimes, your product or service isn’t differentiated enough. If an investor feels they could invest in another company doing nearly the same thing, with fewer risks, they’ll shift their focus. It’s not just about being good—it’s about being the best option in the market. 💡 Pro Tip: Last-minute investor pull-outs are rarely about external forces. Often, it’s internal factors—trust, clarity, execution ability—that scare them away.

As a business owner, I've learned that selling your company isn't just about finding a buyer - it's about creating the right market. That's why I created this article to share my experience and insights on "Getting M&A Deals Done – Generating Demand vs. Supply." In it, I dive into: • What happens when the right buyer walks away • How skilled investment bankers create market demand • The importance of 'packaging' your company • Navigating the evolving buyer landscape • Mitigating risks with multiple buyer options Don't let your dreams of the perfect sale run away from you. Read the blog and tell me what you think! https://bit.ly/3WjgLbu #MergersAndAcquisitions #BusinessSale #InvestmentBanking #AllegianceCapital

HHigh levels of uncertainty, rising interest rates, and geopolitical tensions have eroded business confidence, leaving capital scarcer and more costly. Banks are less willing to finance deals, and equity investors are more cautious and expect higher returns. These tough conditions naturally discourage many potential dealmakers, but experienced hands are not deterred. Expert dealmakers remain active, scouting for bargains or preparing for divestitures. And with good reason: our research consistently demonstrates that deals made in challenging market conditions offer the highest potential for value creation.

Fbuyout managers should invest with operational value creation at the forefront. This means that in addition to strategic diligence, they should conduct operational diligence for new assets. Their focus should be on developing a rigorous, bespoke, and integrated approach to assessing top-line and operational efficiency. During the underwriting process, managers can also identify actions that could expand and improve EBITDA margins and growth rates during the holding period, identify the costs involved in this transformation, and create rough timelines to track the assets’ performance. And if they acquire the asset, the manager should: 1) clearly establish the value creation objectives before deal signing, 2) emphasize operational and top-line improvements after closing, and 3) pursue continual improvements in ways of working with portfolio companies. Meanwhile, for existing assets, the manager should ensure that the level of oversight and monitoring is closely aligned with the health of each asset.everyone should understand and have a hand in improving operations. Within the PE firm, the operating group and deal teams should work together to enable and hold portfolio companies accountable for the execution of the value creation plan.

“Choosing the right exit strategy is one of the most crucial aspects of exiting a business. There are several types of exit strategies, so which one should you choose?” https://buff.ly/3zA44yj #Valuation #Businesstips #SuccessionPlanning #ExitPlanning

“Choosing the right exit strategy is one of the most crucial aspects of exiting a business. There are several types of exit strategies, so which one should you choose?” https://buff.ly/3zA44yj #Valuation #Businesstips #SuccessionPlanning #ExitPlanning

What's the easiest way to tell that a syndicator may be untrustworthy? In my opinion, it’s their deal’s projected exit cap rate. Unfortunately, there are syndicators and sponsors out there whose first priority is not the protection of their investors. A syndicator can structure a deal so that operators make all their money on fees and churning through deals, with no regard for returns to the investors. One of the easiest ways to make a deal with little or no value-add look really good on paper is by manipulating the exit cap rate. Without getting into the weeds, the cap rate is a way to determine the market value of a property’s net operating income (NOI). If an operator manipulates the exit cap rate to achieve a more favorable valuation than the cap rate at the purchase of the property, they may be trying to dupe investors. Investors may be tricked into thinking that it's a great deal, even though the operator doesn't have significant plans to add value to the property. A good rule of thumb for cap rate projections is that the cap rate at exit should be calculated equal to or higher than at acquisition (a higher cap rate means a lower valuation). That means that the operator is actually adding value, or increasing the NOI of the property, instead of projecting that market conditions will improve. If you detect this type of calculation in a deal presented to you, I can almost guarantee you that the acquisition fee they're charging is higher than average and that they won't have any long-term deals with investor success to present as a track record. There may be exceptions to this rule, or tip, but for the most part, it's a sign you should start looking closer. If you'd like to learn more about how I set up my syndications to align my interests with my investors, send me a DM.

A right of first refusal is one investment term that, if founders aren't careful, can come back to haunt them down the road. Learn more about why founders should deny investors a right of first refusal. Link: https://lnkd.in/gvYvG_s7 #founders #pathtoexit

📈 New on the IBBlog': Understanding Market Conditions in M&A and IPOs: Your Guide to Investment Banking Interviews! 🚀 Navigating the complexities of investment banking interviews can be challenging, especially in today’s high-interest rate environment. Our latest article explores how current market conditions impact M&A and IPOs, equipping you with the insights needed to excel in your interview prep. Highlights Include: 1️⃣ M&A in a High-Interest Rate Environment: Learn how high rates affect deal structuring and valuation, with real-world examples like Microsoft's $68.7 billion acquisition of Activision Blizzard. - Interview Scenario: How would you advise a client on financing an acquisition at 7% interest? 2️⃣ IPO Market Dynamics: Explore the challenges of the IPO market, including the impact of high rates on launch timing. Discover strategies from companies like Stripe and Arm, who navigate these turbulent waters. - Interview Scenario: What market signals would you watch for when advising a renewable energy startup on its IPO? 3️⃣ Advisory Revenue Growth: Understand how banks maintain stable advisory revenues by providing strategic counsel amid economic uncertainty, as seen with JPMorgan's increased advisory fees. - Interview Scenario: How would you balance an acquisition with a debt restructuring plan for a Fortune 500 company? 💡 Practical Tips for Interviews: - Use specific examples to showcase your market awareness. - Quantify your responses to demonstrate technical understanding. - Highlight your adaptability to client needs in a shifting market. By mastering these insights, you'll be well-equipped to tackle technical and strategic questions in your investment banking interviews. 👉 Read the full article now to sharpen your interview skills! https://lnkd.in/eKykW6Hi And remember, you can book mock interview sessions with IBprep to practice and get tailored feedback! 🎯

"The DCF Valuation Emperor Has No Clothes." This is how Harvard puts it. "The Unpopular Truth about Business Valuations." This is how the cats at Venture First put it. Damn straight. John Shumate and his team call it like it is. The big question then is "How can we mitigate the qualitative nature of business valuation?" In plain terms, "How can we quickly and accurately calculate the value of a business based on its quality, its strategic capacity?" We have the answer. Fast, efficient, inspiring, and accurate. You gotta love the power of smart technology. -George https://lnkd.in/eH9dgVFC