05/03/2026
The broker said “must-see deal.”
I opened the CIM on Tuesday.
Talked to the seller by Wednesday.
By Friday, I passed.
Here’s why.
The listing said:
💰 $2.4M revenue
📈 “Strong margins”
👥 “Loyal customer base”
🚀 “Huge growth upside”
Here’s what the tax returns said:
📉 Revenue flat for 3 years
🧾 $180K in “addbacks” that were lifestyle
⚠️ One customer at 38% concentration
🏦 Line of credit maxed out
That’s the catch.
Brokers sell hope.
Operators buy cash flow.
Most people read the headline numbers.
I look at four things first:
🔎 Customer concentration
🔎 Real SDE after clean addbacks
🔎 Debt load
🔎 Working capital trends
If one customer is over 20%, we renegotiate or walk.
No debate.
If “addbacks” need a story to make sense, they’re not real.
If working capital swings hard month to month, you inherit stress.
This deal was priced at 4x fantasy earnings.
In truth, it was closer to 2.2x.
At the right price, I would have bought it.
At their price, it was a sinking ship with clean branding.
Most deals don’t fail in diligence.
They fail in discipline.
You don’t lose money on bad businesses.
You lose money on bad structures and ignored red flags.
The boomer wave is here.
Thousands of owners want out.
Some built machines.
Some built jobs for themselves.
Your job is to know the difference in 30 minutes.
Bring me a deal.
We'll analyse it for you for free.