What I Learned Evaluating Hundreds of Businesses Before Buying One
By Robert Frary · robertfrary.com
Before I bought my business, I spent ~1 year in active search mode. I went through brokers, online marketplaces, and direct outreach. I used a CRM to manage my deal flow the same way I used to manage a sales pipeline. I evaluated hundreds of businesses across a wide range of industries, sizes, and geographies.
Most of them I walked away from, quickly. A handful made it deep into the process. Two of them nearly destroyed my family's financial situation before I figured out what was actually going on.
What I learned from that process isn't the kind of thing you find in a book about buying businesses. It's the stuff that only becomes clear after you've been in enough deals to see the patterns. I'm writing it down here because I think it's useful for both sides of the transaction - buyers who are searching and owners who are thinking about selling.
The thing that killed deals faster than anything else: broken trust
People talk about deal killers like they're financial - bad numbers, wrong multiple, customer concentration, too much owner dependency. Those things matter - they’re obviously mission critical. But in my experience, the single fastest way to kill a deal wasn't a financial issue. It was a trust issue.
Once trust was broken, I couldn't continue. Not because I was being emotional about it, but because trust is actually the logical foundation of an acquisition. When you buy a business, you are betting that what you were told is true. You're signing legal documents based on representations made by the seller. You're putting your own money, and in my case my family's financial security, on the line based on information someone else gave you.
If I caught someone being less than fully transparent early in the process, my immediate question wasn't "what did they hide?" It was "what else did they hide that I haven't found yet?" There's no good answer to that question. So I walked.
Here's what broken trust looked like in practice:
Misrepresented SDE. The SDE advertised in the listing or CIM didn't match what the financials actually showed when you dug in. Sometimes it was an honest mistake in how the numbers were presented. Sometimes it wasn't - it was clearly intentionally misrepresented to make the business appear to be more appealing than it truly was. Either way, if the headline number was wrong, everything else was compromised because they either didn’t know how to properly run the calculations or they were intentionally misrepresenting the financials. A dealbreaker either way.
Skeletons disclosed too late. Every business has issues. I never expected perfection. What I expected was that a seller would tell me about the significant problems upfront, before I invested serious time and money into evaluating the deal. When I discovered material issues during due diligence that should have been disclosed at the beginning, it told me one of two things: either the seller was hoping I wouldn't find it, or they didn't think it was a big deal - which meant they might have a very different definition of "material" than I did. Either way, not good.
Contradictory stories. One of the most common versions of this: a seller tells you in an early conversation that the business requires 60 hours a week from them personally and they complain about having so much of their time locked up in the business. Then, weeks later when you're talking about transition planning, the same seller tells you the business basically runs itself and they're barely involved. Both of those things cannot be true. When a seller's story shifts depending on what they think you want to hear, you're not getting the truth. You're getting a pitch. I don't buy pitches. The second I felt I was being ‘sold’ or felt like they were trying to convince me of something, I was out.
The brokers who cost their sellers everything
I want to be careful here because I've worked with some excellent brokers. The good ones are genuinely valuable - phenomenal at their craft - they know their sellers' businesses, they qualify buyers, they keep deals moving, and they earn their keep. This isn't about those people.
This is about the brokers who, I'm fairly certain, cost their sellers real deals without the sellers ever even knowing it happened.
Here's what I mean. In Texas, you need a real estate license to sell a $20,000 parcel of land. You need no business broker license (in Texas) to represent a seller in a $20 million business transaction. That means the quality of brokers in the small business space varies enormously. Some are highly-competent professionals. Some are not.
The bad ones showed up in a few ways:
Gatekeeping to the point of killing momentum. Buying a business requires asking a lot of questions and gathering a lot of critical data. That's not a red flag - it's due diligence. It's exactly what a serious, capable buyer does. Some brokers seemed to interpret every question as an imposition, responding slowly, incompletely, or with an attitude that made you feel like you were bothering them. I stopped engaging. I can only imagine how many other qualified buyers did the same, and it’s gut wrenching thinking about the brokers that cost their clients a sale knowing that 80% of businesses that go up for sale end up never being sold.
Requiring buyers to earn access. There's a version of this where the broker makes you feel like you need to bow down and prove yourself worthy before they'll show you the financials or schedule a call with the seller. Some degree of buyer qualification is appropriate and necessary. I get it, and I’m sure there are plenty of stories the brokers can share about how many times they’ve been burned by ‘tire kickers; and the like. Regardless, making a seriously engaged buyer feel like a suspect in an interrogation is repellant. It kills deals. I always expected some qualification/filtering when inquiring about a deal, but once it felt like I needed to send in my tax returns, social security number, a blood sample, and take a polygraph to prove I was worthy of seeing the CIM…I could only imagine how miserable it would be working with that broker later on when deeper in the deal - I was out.
Getting annoyed by real buyer behavior. Multiple rounds of questions, requests for additional documentation, follow-up calls - these are all signs of a buyer who is genuinely interested and doing their homework. A good broker welcomes this. It means the deal might actually close. The brokers who pushed back on normal buyer diligence were, in my view, either inexperienced or not working in their seller's best interest. That’s the role of a broker whether they like it or not - their job is to represent the seller and vet the good, the bad, and the ugly. If that’s not something they can (or will) do, they’re not delivering on their contractual obligation to the sellers and should take a good look in the mirror as to whether or not this is the right path for them. Maybe it’s not, and that’s fine - I just hope they all understand the gravity of their work and the impact that each of their decisions in this process can have on multiple generations of a family.
The thing that bothered me most about these situations wasn't the lost time on my end. It was thinking about the sellers. These were real business owners who hired someone to represent their life's work, and in some cases that person may have quietly walked away from their best prospects. I doubt many of those sellers were ever told the full story - I’m sure they never heard about the times their broker dropped the ball, from their broker...
The two deals that almost ruined me
I want to tell you about two separate deals I came very close to moving forward with. I'm not going to name the businesses or the industries because that's not the point. The point is what I almost missed, and what saved me.
Both businesses looked good on the surface. The high-level numbers were attractive. The SDE as advertised was great for me. These were businesses I could actually see myself buying and running - I was genuinely excited about both of them at various points in the process.
When I ran the financials through the financial modeling tool provided by the Acquisition Lab, some things didn't add up. Numbers that should have reconciled, didn't. Margins that should have made sense given the business model, didn't. I assumed I was making an error - wrong inputs, bad formula, some sort of user error on my end with the financial modeling tool. I went back through my work multiple times trying to find my mistake.
Eventually I brought both deals into some of the advisor office hours in the Acquisition Lab. I walked through my financial models, showed them my work, and asked them to help me find where I'd gone wrong.
They told me I hadn't gone wrong anywhere. The deals were the problem.
"Robert, you need to run as far away from this as you can."
I was shook.
The SDE figures that had been advertised were not accurate. The actual earning power of both businesses, when you ran the real numbers, was significantly lower than what had been represented. Not slightly off. Significantly off.
At the time I was making a serious leap. I was leaving a solid career - my wife wasn't working - two young kids. The financial cushion was not unlimited. Had I moved forward with either of those businesses based on the numbers I'd been given, and not found the discrepancies myself, it would have been devastating for me and my family.
The financial modeling tool didn't save me by being magic. It saved me by forcing me to do the work rigorously enough that the inconsistencies became impossible to ignore. The advisor office hours saved me by having experienced people confirm what the numbers were telling me.
If you're a buyer in active search: do the financial modeling before you spend money on professional due diligence. Know what you're looking at before you hand it to your CPA and start running up billable hours. The discipline of building the model yourself will surface problems that a casual review will miss.
The thing that most searchers don't realize about their search
Here's something I figured out early that I don't think most buyers think about consciously: searching for a business to buy is a sales process. Structurally, mechanically, it's almost identical.
I spent years in my career running pipeline for enterprise sales organizations. I've been head of pipeline strategy. I've built SDR teams, managed CRMs, designed outreach cadences, and coached people on pipeline hygiene. When I started my search, I almost immediately recognized that I was doing the same thing - building a list, doing outreach, managing contacts, tracking conversations, following up, moving deals through stages.
So I ran it like a sales process. I used HubSpot to manage my deal flow. I tracked every business I looked at, every broker I spoke with, every call I had. I had outreach cadences. I had follow-up reminders. I had a system for what happened at each stage of interest.
I think this is one of the real reasons I actually ended up closing a deal when many searchers spend years looking and never get there. Not because I was smarter or had more money or got lucky. But because I was genuinely more organized and methodical than most buyers, and in a process that requires sustained attention across many parallel conversations over a long period of time, that matters enormously.
Most searchers are not doing this. They're keeping notes in a spreadsheet at best, in their head at worst. They're following up when they remember to. They're losing track of conversations that had real potential because there was no system to keep them alive.
If you're searching for a business to buy and you don't have a CRM to help you manage your pipeline, you’re making your search harder than it needs to be and you’re almost certainly leaving deals on the table.
What I'd tell a seller based on all of this
If you're a business owner thinking about selling at some point, here's what I'd want you to know from having been on the other side of your deal:
Full transparency from the start is not a weakness. Owners sometimes hold back on problems because they're afraid it will kill the deal. In my experience, the opposite is true. A seller who leads with honest disclosure of the issues - here's what we're dealing with, here's what we've done about it, here's the risk you're taking on - builds trust faster than anything else. Buyers know businesses aren't perfect. They're making a bet on the whole picture. Give them the real picture.
Your broker represents you. Their behavior, their attitude, their responsiveness - all of it reflects on you and affects your deal. Ask your broker to tell you specifically about prospects who disengaged and why. If they can't or won’t answer that question clearly, pay attention to that. Your broker will gatekeep, and that’s normal - work with them to understand the process and mutually agree on at which point in the process you want to be connected with the potential buyers - you may want to be looped in earlier than your broker assumes.
The buyer asking a lot of questions is the buyer you want. Serious buyers do serious diligence. If someone is asking you detailed questions about your financials, your customer relationships, your operational systems - that's a good sign, not a red flag. Make it easy for them to find the answers.
Your SDE needs to be real. Not optimistic. Not what it could be under the right conditions. Real and defensible. A buyer who gets through due diligence and finds that the SDE was overstated is a buyer who walks away, and who tells other buyers in their network what they found.
Most of what makes a business easy to buy is the same as what makes it worth owning. Clean financials. Honest representation. A system that runs without depending entirely on the owner. Transparency about the risks.
That's not just good advice for selling a business, it’s how you build one worth keeping.
If you're thinking about selling your business I offer a straightforward first conversation where we look at your business through the lens of what a buyer would actually see. No pitch, no pressure. If you want an honest read on where you stand, I'm happy to talk.
Robert Frary
Business owner, operator, and advisor based in Austin, TX. I help founder-led companies build more valuable businesses and navigate what comes next. robertfrary.com