What kills SMB deals with PE buyers (that most owners never see coming)

Been doing this 15 years. The deals that fall apart are rarely about revenue recognition or something like that. Usually it comes down to one of three things: 1. Customer concentration. One customer is >20% of revenue and the seller never thought twice about it. I see this all the time and PE hates this. Even if the relationship goes back a decade, it shows up as a major risk discount at closing — or they just walk. Some of the SMBs I have worked with have had 50%+ concentration and never thought about it 2. Owner dependency. The business only runs because the owner is the business. No real GM, no systems, no second-in-command. Every deal has some of this but when it's severe the buyer has to figure out how to replace you on day one, and that's a hard ask at any multiple. 3. Messy books. Not fraudulent — just sloppy. Personal expenses mixed in, inconsistent revenue recognition, no clean P&Ls going back 3 years. This stuff drags out diligence by months and buyers use it as a hammer in price negotiations. 4. Not planning for taxes... this one is avoidable but takes some foresight which is tough because lot of people think they will run the company forever. But if you plan on selling you should really think about structuring as a C-Corp to take advantage of the QSBS deduction (perhaps the single greates tax break there is) *disclaimer I am not an accountant Most owners spend a decade building revenue and then lose 1-2x EBITDA in the back half of a deal over stuff they could've fixed with 12 months of prep. If you're thinking about an exit in the next 3-5 years, worth doing an honest audit of these three areas now. Happy to answer questions.