Business metrics are important and we’ve written about them extensively here. What’s not often discussed is the soft side of a deal - the people, their behavior, and what it signals. It’s impossible to do a good deal with bad people, which means the personalities, proclivities, and oddities play a large part in dealmaking. 

We’re fortunate to see a lot of opportunities, over 2500 just last year, and are constantly in conversation with executives. This affords us the ability to recognize patterns and develop specific criteria of behavior that provide insights into an owner’s motivations, and subsequent corporate culture. Here are some of the signals and how we interpret them. 

There are lots of gatekeepers keeping the gate closed.

Between intermediaries, assistants, and various other “helpers,” it can become challenging to get a clear picture of reality. We get suspicious when others are always answering questions, explaining the situation, or making excuses. We want partners who are forthright and accessible. If we can’t get access to the executive, how could a lower-tier employee with a critical message?  

The owner is unresponsive, or highly inconsistent.

Transactions are challenging experiences, without exception. If we can’t get quick, candid answers during initial discussions, how should we expect due diligence to go, or our post-close collaboration? How does the owner’s flakiness manifest in the company culture? Values always trickle down from the top. Owners who are hard working call back and return emails within 24 hours.

Everything is an emergency.

Every organization has a different vibe and it almost always correlates closely with leadership. Some organizations are calm, collected, and proactive, interrupted by brief periods of emergency. Others are in a constant state of discontent and chaos, highly reactive to that day’s “fires.” While real fires do pop up and need to be dealt with appropriately, most events are not emergencies. Treating them as such leads to corporate adrenal fatigue, where everyone is wired, tired, stressed, and distracted. 

There are no key performance indicators (KPIs).

When asked about how the business is performing, executives often default to a combination of gut feel and vanity metrics. Things are good “because our biggest customer increased orders last month.” Depending on the person’s experience and expertise, it can work, but presents big challenges for scale. What happens when there’s not enough gut feel to go around? 

There’s a lack of clarity around roles and responsibilities.

As organizations grow, roles and responsibilities must become clearly defined, allowing for focus, specialization, and hopefully excellence. Without clarity, communications become strained, work is duplicated, and confusion is abundant. When we asked about someone’s role, we’re interested in where direct responsibilities start and stop. 

Advisors are always the bad cop.

As discussions and negotiations heat up, the seller hides. Those onerous terms were the lawyer’s idea. Asking for double the compensation came from the CPA because it’s “industry standard.” Business is always hard and the ability to disagree well is highly under-appreciated. If something is worth debating, it’s worth being your idea. Own it, discuss it, and move on. When conflict happens, the worst idea is to pass the blame.  

The hand is constantly being overplayed.

There’s a thick line between optimism and dishonesty. The future is murky, but it’s frustrating when facts always slip in a negative direction. Either the person is shady or disconnected from reality -- both deal killers. 

There are dubious claims of high competition.

We all understand the concept of supply and demand. And yes, prices can be driven higher through a fear of missing out (FOMO). With that said, it’s pretty easy to spot. Often these games provide a negative selection bias where the only buyers willing to participate are less desirable and have few opportunity costs. 

A lack of preparation speaks volumes.

If you can’t dedicate time to us, how do you address serious challenges in the business? If you can’t focus on a life-changing transaction, what can you focus on? If you don’t take this seriously, how can we rely on you during challenging times? 

Relationships are complicated.

It feels like we’ve seen it all. Site visit dinners have turned into family counseling sessions. Strategy discussions have become screaming matches. We’ve watched a CFO dressed down for improper punctuation and a front desk person get fired on the spot. There’s never just one rat in the kitchen. Cracks on the surface always indicate much deeper issues. 

Claims of “no competition” are laughable.

Every successful business attracts competition. If you have none, you don’t have a real business. We get that you need to be a cheerleader, but we hope you don’t buy into your own BS. Acknowledging weakness is the first step of progress and we want to see a leadership team that is both self-aware, and up-to-speed on their industry. 

Waitstaff are treated poorly.

Money only makes you more of what you already are. We’re always watching for how someone treats “the little guy” and trying to project how behavior would change with a large influx of capital. If someone mistreats the waitstaff, there’s a very good chance that attitude pervades the corporate culture. 


To be clear, there’s always room for misinterpretations, bad days, and some “off” comments. No one is perfect, and we’ve all been there. We have found the relationship development to be similar to dating. Are you going to leave your sweetheart for one poorly thought out comment? No. But are you going to leave an otherwise attractive person if they prove repeatedly to be lacking character or judgment? One would hope.

We buy with no intention to sell. Such a holding period means that it’s even more important to make sure we’re going to enjoy our future partnership.