The library

The mistakes, ranked.

Every issue from every deal, grouped by type and sorted by how often it shows up. 99 mistakes across 15 deals so far.

Operational problems

18× · 1 fatal

How to prevent it

  • Before buying/opening, the buyer group should have assigned a local operating partner with clear authority, equity incentives, and required on-site hours.
  • During diligence, the buyer group should have tested whether the franchise model could run remotely by interviewing comparable franchisees and reviewing manager turnover/performance requirements.
  • For construction targets, the buyer should review every active project’s percent complete, billed-to-date, cost-to-complete, and remaining gross profit before closing.
  • The closing statement should adjust for profit already taken by the seller on incomplete projects through working capital, escrow, or purchase-price reduction.
  • A construction CPA or experienced project manager should validate job-cost reports against field progress and customer billing records.
  • Before any LOI for deal three, the buyer should have set a 90-day stabilization gate for the first two businesses covering customer retention, clean payroll, and monthly cash flow.
  • After each closing, the buyer or an outside operator should have produced a weekly integration dashboard before the buyer was allowed to source another deal.
  • The lender and buyer should have stress-tested the portfolio's total debt service after lost accounts and delayed integrations, not just under the original spreadsheet case.

Too much debt

13× · 1 fatal

How to prevent it

  • Before financing the Dallas deal, the buyers and an SBA-experienced lawyer should have modeled the exact impact of Dallas defaulting on Structure Landscapes’ debt service and collateral.
  • Before closing, the buyers should have refused to let Structure guarantee the Dallas SBA loan unless Structure could still operate after absorbing the full Dallas debt.
  • At the financing stage, the buyers should have documented a downside plan showing what assets the Dallas lender could reach and whether Austin could be ring-fenced.
  • Before accepting SBA financing, the buyer should stress-test cash flow with EBITDA cut in half and confirm monthly debt service is still manageable.
  • At financing, the buyer should raise extra working capital, negotiate a larger seller note, or add an earnout so debt payments do not overwhelm a surprise turnaround.
  • Before closing, the buyer and lender should agree on a 13-week cash forecast for the first quarter after close.
  • Before signing the loan, the buyers and lender should have stress-tested cash flow at materially higher interest rates, including the seller note, retention bonus, payroll raises, and seasonal low months.
  • At closing, the buyers should have reserved a specific cash buffer sized to cover several months of debt service and operating losses if rates rose or margins fell.

Key people left

12× · 1 fatal

How to prevent it

  • Before closing, Josh should have conducted stress-focused reference calls with the partner’s former employers, customers, and coworkers.
  • The partners should have agreed in writing who controlled dispatch, phones, customer intake, estimating, and field operations during emergencies.
  • The company should have adopted a workplace safety policy banning weapons and threats at company facilities.
  • Before close, the buyer should identify whether the seller is mission-critical after closing and create a replacement plan for that role.
  • For any seller staying as clinical leader, the buyer should run license, payer-sanction, malpractice, litigation, and reputation checks before signing definitive agreements.
  • The buyer should condition close on having at least one independent clinical leader or advisor ready to step in if the seller exits or is removed.
  • Before giving equity to a license holder, the buyer should price alternatives such as hiring, renting, or contracting with a qualified master electrician.
  • Any partner admission should require values interviews, references, role clarity, spending rules, and a buy-sell agreement before closing.

Due-diligence gaps

8× · 2 fatal

How to prevent it

  • Before accepting a new partner, Josh or his attorney should have run a background check, litigation search, license verification, and reference calls.
  • The buyer should have paused closing when the SBA required a master plumber and treated the new partner like a new acquisition target, not a workaround.
  • The lender and buyer should have discussed license-holder requirements earlier in underwriting so the partner scramble did not happen at the finish line.
  • Before signing the purchase agreement, the buyer should have run a focused financial diligence workplan even without a full QoE: transaction testing, margin rebuilds, inventory sampling, and customer checks.
  • The buyer’s accountant should have tested revenue and COGS classification on a sample of high-volume services before closing.
  • The buyer should have kept a written diligence checklist and refused to close until every high-risk item had a documented answer.
  • When diligencing a regulated healthcare business, the buyer should hire the most qualified field-specific billing-and-chart audit firm before accounting diligence starts, even if it costs more.
  • The buyer should require the audit provider to document every exception, the independent evidence used to clear it, and any items cleared only by seller explanation.

Legal / regulatory

8× · 1 fatal

How to prevent it

  • Before closing, an independent business attorney should have drafted a full operating agreement with deadlock, buy-sell, removal-for-cause, and exit provisions.
  • Josh should have refused a true 50/50 structure unless there was a clear tie-breaker or forced buyout mechanism.
  • The agreement should have allowed the company to remove or replace the license-holder if there was misconduct, threats, abandonment, or failure to perform.
  • At LOI and again before signing definitive documents, the buyer should decide whether the seller is trustworthy enough to transact with, separate from economics and structure.
  • The lawyer and board should make clear that seller notes, holdbacks, and escrows reduce loss after a problem but do not make a fraudulent seller safe.
  • If integrity concerns remain unresolved by the bring-down diligence meeting, the buyer should delay closing or walk away rather than relying on structure.
  • Before closing, deal counsel should have drafted the strongest enforceable seller non-solicit, confidentiality, and customer-transition protections available.
  • The buyer should have tied part of seller financing or a holdback to the seller not soliciting transferred customers.

Misrepresented financials

7× · 4 fatal

How to prevent it

  • During due diligence, have healthcare counsel and a specialist billing auditor verify claims compliance directly against patient charts, payer remittances, and audit history before closing.
  • Before final investment approval, require the buyer, board, and counsel to review a fraud-risk memo summarizing all billing anomalies, payer restrictions, and unresolved investigations.
  • At closing, make the deal contingent on written confirmation that there are no undisclosed payer audits, Medicaid investigations, or restrictions on treating insured patients.
  • Before closing, the buyer’s CPA should reconcile every large customer deposit to a signed contract, production status, delivery evidence, and deferred-revenue balance.
  • The purchase agreement should include a specific escrow and indemnity for unearned deposits, undelivered trailers, and misstated revenue.
  • The buyer should test gross margin by product using actual material, labor, and overhead costs before accepting advertised EBITDA.
  • During due diligence, the buyer and QoE provider should rebuild EBITDA from payroll and benefits detail, showing which family costs are truly removable and which must continue.
  • Before signing the purchase agreement, the buyer’s lawyer should require a schedule of all family-related compensation and a seller representation that each addback is non-recurring or unnecessary post-close.

Other

6×

How to prevent it

  • Before closing, the buyer should define objective milestones for continuing investment: revenue, profit, manager tenure, and cash burn limits.
  • The owner should hold a quarterly keep/sell/close review for any store losing money, rather than waiting until a lease renewal forces the decision.
  • Six months before any lease renewal, the operator and finance lead should prepare three options: close, renegotiate, or renew with a funded turnaround plan.
  • Before acquiring or operating a turnaround, the lead owner should write down which functions they personally can and cannot run: operations, marketing, sales, staffing, and finance.
  • The ownership group should bring in outside operating help or a franchise peer review when performance misses plan for two consecutive reporting periods.
  • Before leaving a high-paying job, the buyer should test the fallback employment plan with current job-market data, active recruiter conversations, and a written timeline for reemployment.
  • Before closing, the buyer and spouse should decide what happens if the business fails and the buyer cannot quickly replace prior income.
  • Before closing, the operating agreement should have required the partner to wind down his prior company by a specific date.

Poor strategic fit

5× · 1 fatal

How to prevent it

  • At thesis stage, the buyer should define why manufacturing belongs in a construction-services platform and what capabilities are missing before pursuing the deal.
  • Before signing, the buyer should model management time as a scarce resource and identify who will run the acquired company day to day.
  • The partners should agree in writing on a stop-loss trigger, such as cash burn, missed margin targets, or hours diverted from the core businesses.
  • Before buying the first company, the buyer should have defined the intended exit buyer and the minimum scale, geography, and management structure that buyer would require.
  • Each year, the buyer or broker should have compared the portfolio against institutional-buyer criteria before assuming a 3.5x-4x exit multiple.
  • Before pursuing the Dallas deal, the owners should have required Structure to complete at least one full operating cycle under new ownership.
  • The buyers should have prepared a written add-on investment memo proving Dallas could stand alone without cash from Austin for at least 12 months.
  • Before closing Dallas, the partners should have reserved the capital already planned for Austin’s growth and efficiency projects, rather than using it as Dallas rescue capacity.

Overpaid / bad valuation

5× · 1 fatal

How to prevent it

  • When an offer arrives for a failing location, the owners should compare the offer against a written 12-month cash burn forecast and a realistic turnaround probability.
  • The ownership group should set a minimum acceptable sale price and a maximum additional-loss limit before rejecting any distressed offer.
  • During due diligence, the buyers should have completed a full quality-of-earnings review and tied the purchase price to verified EBITDA, not advertised EBITDA.
  • Before closing, the buyers should have reduced price, added a seller earnout, or walked away if the business no longer met their minimum EBITDA threshold.
  • Before listing the business, the buyer and broker should have modeled likely bids from both SBA buyers and institutional buyers rather than anchoring on the desired multiple.
  • At acquisition and during operations, the buyer should have tracked how much debt service a future SBA buyer could support at different prices.
  • Before LOI, the buyer should require a written explanation for why the worst-performing store will improve, including which problems are local management versus market demand.
  • The buyer should value a losing store based on current losses and required investment, not on historical peak volume or traffic counts.

Culture clash

5× · 1 fatal

How to prevent it

  • Immediately after closing, the buyer should have moved all inbound leads, texts, and calls into company-owned systems with monitored access rights.
  • At closing and again during onboarding, every employee handling leads should have signed confidentiality, non-solicit, and company-opportunity acknowledgments reviewed by counsel.
  • Operations management should have audited lead volume, CRM entries, and lost opportunities weekly for the first six months to detect diversion early.
  • During due diligence, the buyer should have spent time on the shop floor with key tradespeople and tested whether they would accept him as the new operator.
  • Before close, the buyer should have built a retention and communication plan with the seller for skeptical employees, especially scarce mold makers.
  • In the first 30 days, the buyer should have identified informal leaders and involved them in operating changes before rolling out new management systems.
  • During due diligence, the buyer should spend meaningful time with the leadership team and discuss the exact changes planned, including CRM, meetings, reporting, and growth targets.
  • Before closing, the buyer should have each key leader confirm in writing their role, decision rights, and which operating changes they agree to support.

Integration failure

5×

How to prevent it

  • For the first 12 months after close, the buyer should have kept the seller's brand name, phone number, crew assignments, and customer routines intact.
  • Before any rebrand, the buyer should have surveyed or called top recurring clients to understand what they associated with trust and continuity.
  • If a brand change was necessary, the buyer should have phased it in with seller-backed customer communication rather than changing vans and cards abruptly.
  • Before making the third offer, the buyer should have built a written integration plan with owners, dates, and dependencies for payroll, insurance, scheduling, suppliers, and accounting.
  • The buyer should have budgeted for temporary admin or bookkeeping help during the first 90 days after each close.
  • Closing documents should have required sellers to provide system access, process maps, vendor lists, and payroll calendars before handover.
  • Before closing the first acquisition, the buyer should adopt a written rule that no add-on LOIs can be signed until the first company has at least two quarters of stable cash flow, payroll, reporting, and customer retention.
  • If an add-on opportunity appears early, the buyer should ask an advisor or board to review whether the base business is actually stabilized before any LOI goes out.

Customer concentration

5×

How to prevent it

  • During diligence, the buyer should group customers by ultimate owner, sponsor, family office, or decision-maker instead of counting each legal entity separately.
  • Before financing, the buyer should run a downside case where the largest grouped relationship leaves and confirm the business can still service debt.
  • Before closing, the buyer should require seller-assisted calls or retention checks with the top grouped customer relationships, with a holdback if access is denied.
  • During due diligence, the buyer should have mapped revenue and gross profit by customer, employee, and manufacturing process, not just by customer revenue percentage.
  • Before closing, the buyer should have confirmed where the departing employee was going and whether he had equipment, customer proximity, or plans to compete.
  • The buyer should have required retention agreements or transition bonuses for employees tied to the most profitable customer work.
  • During due diligence, the buyer and seller should meet every top customer more than once and document what each customer needs to see to keep sending large projects.
  • Before signing the LOI, the buyer should model a downside case where 2-3 top customers pause large projects for 12-24 months.

Market shift

2×

How to prevent it

  • Before moving facilities, management should have required signed backlog and deposits sufficient to cover the move disruption and fixed costs.
  • The buyer should have treated the 2021-2022 order surge as potentially temporary and stress-tested demand after customer inventory normalized.
  • A board or investor review should have approved the move only after comparing the no-move downside case against the new-facility downside case.
  • Before LOI, the buyer should have mapped the industry trend: ATM usage, cash usage, dispensary demand, consolidation, and repair outsourcing versus in-house repair.
  • The buyer should have asked competitors and suppliers whether small independent ATM repair shops were growing, shrinking, or being consolidated.
  • The buyer should have built a base case using flat or declining volume rather than assuming old revenue levels would return.