Deal Killer | Why It Happens | Impact on Your Deal | How to Prevent It |
1. Surprises in Due Diligence | Scattered lease docs, expired franchise agreements, untracked obligations | PE team loses confidence and questions valuation | Build a clean, centralized data room with real-time alerts and supporting documents in Leasecake |
2. Relying on Audits Alone | Assumes GAAP audit is enough; no adjusted EBITDA view | Inaccurate valuation; missed opportunities to increase earnings | Conduct a sell-side Quality of Earnings (QoE) report 12–24 months before the deal |
3. Incomplete Lease & Location Data | Poor tracking of terms, CAM, co-tenancy, capex, and renewals | Buyer sees real estate as a risk, not an asset | Use Leasecake to track lease terms, obligations, and alignment with franchise agreements |
4. No Clear Use-of-Funds or Growth Plan | No strategic plan for capital deployment | Buyers assume post-close chaos or poor ROI | Create a 3–5 year plan for expansion, including use-of-funds modeling |
5. Cultural Mismatch with the Buyer | No evaluation of buyer’s philosophy or operational style | Employee turnover, franchisee unrest, or deal collapse | Vet PE partners like you would a leadership hire—values, expectations, and vision alignment matter |
6. Tax & Legal Structure Oversights | No planning for entity structure, pass-through taxation, or IP treatment | Millions lost due to poor tax handling; legal delays | Engage experienced tax and legal advisors early to optimize transaction structure |
7. Preparing Too Late | Waiting until LOI to get organized | Rushed process, lower valuation, broken deals | Start 2–3 years ahead with tools like Leasecake to stay ready year-round |
