Sellers Share the Full Story With Buyers They Trust

Every deal hits a difficult moment.

Sometimes it is a customer. The buyer's quality-of-earnings team discovers that the top account, responsible for 22% of revenue, has a 30-day termination clause the seller had never mentioned. Sometimes it is a number. The add-back schedule includes $180,000 in owner compensation that the buyer's accountants classify as partially recurring rather than fully discretionary. Sometimes it is a person. The general manager who runs daily operations announces during week three of diligence that she has accepted a role elsewhere.

None of this is unusual. 

The timing of the disclosure changes how the buyer interprets it. Shared early, it becomes context the parties can plan around. Discovered during diligence, it can look like concealment and raise questions about what else has not been disclosed.

In deals where buyer and seller have built genuine trust with each other, the response is a meeting. The seller explains that the termination clause has never been exercised in 11 years and that the relationship predates everyone currently working at the account. Both parties, having invested months in a process they each want to finish, find a way to work through it. It is not comfortable. But it happens, because there is enough goodwill in the room to absorb the friction.

In deals where the relationship is transactional, where the seller has felt more like a subject of scrutiny than a partner, the same discovery becomes a negotiation. The buyer revises the offer. The seller interprets it as bad faith. The tension from months of guarded exchanges makes every subsequent conversation harder. And frequently, the deal dies.

CT Acquisitions' 2026 deal-failure analysis, drawing on the Axial Dead Deal Report and SRS Acquiom data, finds that roughly 30% of signed Letters of Intent never reach closing. Diligence findings and quality-of-earnings discrepancies account for more than half of those failures. In most cases, the underlying issue was information the seller had, disclosed incompletely, and that the buyer discovered at the worst possible moment, under exclusivity.

The pattern is predictable once you see it. Sellers decide within the first two or three meetings whether a buyer has earned the kind of credibility that makes full disclosure feel safe. That credibility is built by listening. A buyer who spends the first meeting asking what the seller is most proud of signals that they see a person, not a transaction. A buyer who remembers something the seller mentioned three weeks earlier demonstrates that they were paying attention. These are not techniques. They are the natural behavior of someone who recognizes that the human relationship being formed in the first meetings is as consequential to the eventual outcome as any term in the LOI.

The most successful transactions are the ones where principals worked together to identify problems early, managed expectations openly, and stayed focused on getting the deal done. That collaboration does not emerge from a signed NDA. It emerges from the quality of the conversations that came in the first meetings.

Section 1202 lets founders holding qualifying C corporation stock exclude up to $10 million in gain from federal tax, raised to $15 million for stock issued after the 2025 One Big Beautiful Bill Act. The requirements are strict. The company must be a domestic C corporation with gross assets under $50 million through issuance, and the stock must be held more than 5 years from original issuance. Owners operating as S corporations or LLCs today should ask their tax advisor whether their entity choice is costing them the exclusion.

The Carolinas-Virginia Business Brokers Association Annual Conference takes place September 22-24 at the Embassy Suites by Hilton in Cary, North Carolina. The event brings together business brokers, M&A advisors, lenders, attorneys, accountants, and valuation professionals who advise privately held businesses throughout the Southeast. Educational sessions focus on valuation, buyer financing, transaction structure, negotiation, and current market conditions, alongside peer networking and industry roundtables. Details →

The Michigan Business Brokers Association’s annual conference will run from 8:30 a.m. to 5 p.m. at Lansing Community College’s West Campus. Built around the theme “Where Great Deals Begin,” the event will bring together business brokers and advisers working across acquisitions, growth, financing, valuation, and business exits. The full-day program will focus on professional education, industry connections, and collaboration among Michigan business brokers and advisers. Details →

The US middle market remained subdued in Q1, with 747 transactions under $500 million and longer timelines as tariff, commodity, and geopolitical uncertainty weighed on activity. Average valuation multiples for $10 million to $500 million LBOs rose to 7.3x EBITDA, but buyers concentrated on businesses with durable earnings and clean financials. Add-ons represented 76.3% of PE buyouts, while average debt increased to 3.9x EBITDA, showing that financing remains available for quality deals. Smaller platforms still faced a clear scale discount, with a 2.6x valuation gap between $10 million-$100 million and $100 million-$500 million transactions. Read →

Many owners spend years building a business without ever asking how a buyer would evaluate it. In this episode, David Horwich explains the difference between good and bad revenue, why selling additional products to existing customers is often the most efficient growth strategy, and why owners should understand every available path, including keeping the business, recapitalizing, or selling, before deciding on an exit. For founders preparing for a future transaction, it's a conversation on building a business that buyers want to own rather than simply one owners are proud to operate.