Why deals die is a topic most M&A advisors would rather not talk about. But the numbers are hard to ignore: according to Pepperdine, 31% of companies taken to market never reach a signed Letter of Intent — and according to Axial’s Dead Deals Report, roughly one in three that do reach an LOI still don’t close. In this Watermark Wire, we pulled from our own deal book — including two real engagements that didn’t close — to break down the 12 most common reasons deals die, split into what kills them before a signed LOI and what kills them after.
Key Takeaways
- Get priced before you market: a real M&A-ready valuation — precedent transactions, public comps, and a discounted cash flow analysis — so you’re anchored to what the market will actually pay, not what you hope it’s worth.
- Build your data room early: organized records before the information memorandum goes out signal credibility. Scrambling to produce documents mid-process reads as concealment.
- Run your own diligence first: surface financial, legal, tax, HR, and environmental issues before the process starts, while they’re still fixable on your terms — not the buyer’s.
- Get a Quality of Earnings ready before, not after: QofE-driven deal breakdowns have roughly doubled since 2023 (11% to 21%) as buy-side QofE has become standard on nearly every deal. A pre-market sell-side QofE closes that gap before a buyer finds it.
- Qualify buyers before exclusivity: interest isn’t capital. Confirm committed funding and real conviction before you grant exclusivity.