Why One Supply Chain Risk Can Reshape an Exit Process

The deal fell apart at the last minute. 

The buyer had been ready to close, the price was strong, and the structure made sense. Then tariffs hit, and the concentration risk in his supply chain became the reason the buyer walked. 

That experience forced the owner to rethink not just the business but the entire approach to the next process: which advisors to work with, which buyers to target, and how to frame the liability that had derailed the first deal. 

The owner called Axial to better understand his options and develop a game plan. 

Below is an anonymized recap of that conversation: the questions he asked, the guidance he received, and the insights that will help shape the next steps.

About the Owner

The featured owner of today’s issue of Conversations with Owners founded a wholesale distribution business over 15 years ago. He recently stepped back from day-to-day operations, allowing the leadership team to run the business while he focused on other interests. After a health scare, he started thinking more critically about the timing of his retirement. And his ideal exit timeline pulled forward as a result.

What We Asked (and How He Answered)

Why explore a sale now?

After a milestone birthday and a serious health challenge, he realized he did not want to spend the rest of his life running a business. The company generated more income than he needed, and he had other profitable ventures. He loved the business, the team, and the customers, but he was ready to move on. He wanted time with his family and the ability to focus on health and longevity.

What happened with the previous process?

He had previously worked with an M&A advisor with related supply-chain experience. They had a serious buyer at the finish line, whose offer was strong & purchase price in the owner’s desired range. The deal was moving toward a close when the tariff news broke, with profound implications for his business. 

The buyer asked to pause for a month to assess the impact. Then tariffs escalated again, and the buyer paused again. After a substantial delay, the buyer walked, surfacing their primary concern related to the business’s reliance on a single supplier. The owner said it was frustrating, but in hindsight, the experience revealed weaknesses in the business that he was able to address. 

What did he want to change in the next process?

He explained that the business still had significant growth opportunities ahead, despite some parts of the company being newer than others. The previous buyer pool had been limited, with only a handful of buyers reviewing the opportunity. He believed a different advisor could provide access to a deeper pool of buyers who might better understand the company’s growth potential and broader operating footprint. He also noted that reporting timelines varied across the business and that waiting several more months would show stronger performance, which could help with positioning.

What type of buyer did he want?

The owner was well-researched and knew what he wanted. He was focused on partnering with a strategic buyer or a family office, not private equity. He said he had researched private equity processes and heard too many stories about renegotiated terms, deals falling apart after letters of intent were signed, and buyers squeezing every last dollar out of the valuation. He wanted a buyer who would run the business and keep it intact, not tear it apart.

A Note From the Editor: This is a common misconception among owners and a broad (often incorrect) characterization. The PE horror stories are louder than the success stories.

Transaction Objective Profile

What He Asked (and How We Answered)

What kind of valuation multiples should he expect?

He asked what a business of his size and profitability would typically command in the current U.S. market. We explained that multiples vary significantly by industry, market conditions, profitability, and positioning. We shared an example of a deal in a related space where the owner had expected a 7x multiple and ended up with 9x, in part because the advisor had deep sector expertise and had closed two prior deals in that category. We emphasized that the best way to get an accurate sense of valuation would be to speak with advisors who had completed transactions in his industry, as they would have the most relevant comparable data.

He noted that businesses of similar size in his market typically sold for six to seven times EBITDA. We confirmed that five to seven times was a reasonable range, though the final multiple would depend on the business’s growth trajectory, the competitiveness of the process engaging with buyers, and how the supply chain risk was addressed.

Would buyers be comfortable with the international footprint?

He asked whether buyers would be comfortable with his company’s international footprint. We explained that it depends on the buyer. Larger strategics might view the global operating structure as an advantage, while some domestic-focused buyers could see it as added complexity. 

What does the advisor fee structure look like?

We explained that M&A advisory success fees generally range from 3% to 5% of the final purchase price for businesses of his size. Many advisors also charge a monthly retainer in addition, which some credit toward the back-end success fee.. We offered to share more detailed research on fee structures during the next call, including how fees vary by deal size.

What do Axial’s services cost to the owner?

We clarified that the introduction service through Axial’s Advisor Finder Program is free to business owners. The only obligation on their end is commitment and time. 

If an owner hires an advisor introduced through Axial, Axial receives a fee from that advisor rather than charging the owner directly. 

Where We Coached

1. We reframed the supply chain issue as a positioning challenge, not a deal killer.

The owner was concerned that the single supplier relationship had caused the previous deal to fall apart. We acknowledged that buyers would ask about it, but we explained that the way the risk is presented matters as much as the risk itself. If the advisor can show that the supplier relationship is stable, long-term, and supported by contractual flexibility, and if the business has taken steps to diversify or build contingency plans, the concern becomes manageable. And the efficient, successful supplier diversification effort becomes a positive data point in buyers’ eyes, rather than a negative one.

2. We explained why targeting strategics and family offices requires a different advisor profile.

He was clear that he did not want to work with private equity. We explained that not all advisors have the same buyer networks. Some advisors specialize in financial buyers and private equity, while others have deeper relationships with strategics and family offices. Ideally, he needed an advisor who had closed deals with the buyer types he preferred. We told him that part of our research process would be identifying advisors with those specific relationships.

3. We validated his instinct to wait for stronger financials, but added a timing nuance.

He mentioned that waiting another several months would show stronger performance in a specific market, which would help with valuation. We agreed that stronger financials are always better, but we also explained that the process of selecting and engaging an advisor typically takes several months. By starting the advisor search now, he could use that time to prepare, align on strategy, and position the business, so that when the financials were ready, the process could move quickly. Readiness and advisor alignment matter more than perfect timing.

4. We addressed the cross-border complexity as a feature, not a flaw.

He was uncertain whether buyers would view the international operations as a strength or a complication. We explained that it depends entirely on how the story is told. For a buyer looking to expand internationally, the existing infrastructure in the other countries could be a significant advantage. For a buyer focused on the U.S. market, the international operations might be neutral or even a distraction. The advisor’s job is to identify which buyers will see the structure as an asset and to frame the narrative accordingly.

5. We clarified that the previous deal falling apart was not a failure.

He described the tariff situation as frustrating, but he also said the process revealed weaknesses that he was able to fix. We reinforced that perspective. A process that does not close is not always a bad outcome, especially if it surfaces issues that can be addressed before the next process. The fact that he had restructured costs, renegotiated pricing, and tightened operations meant the business was now stronger and more defensible. That work would show up in the next valuation.

What This Conversation Reveals

Supply chain risk is partially a positioning problem.

Buyers expect risk. What matters is whether the seller and advisor can clearly explain how those risks are being managed. In this case, the supplier relationship became a concern not simply because it existed, but because tariffs introduced uncertainty at the wrong moment in the process. Strong positioning, contingency planning, and a credible narrative can make the difference between a manageable issue and a failed deal.

International operations can expand or narrow the buyer pool depending on the narrative.

Some buyers view international infrastructure as a growth platform, while others see added complexity. The structure itself is rarely the issue. The more important question is whether the business is being presented to buyers who understand the opportunity and have the appetite for that type of operating footprint.

Readiness matters more than perfect timing.

Owners often want to wait for the perfect quarter or strongest financial year before going to market, but preparation takes time. Selecting an advisor, refining positioning, preparing materials, and building the right buyer list can take months. Starting those conversations early allows owners to move when the business and market are aligned.

Buyer type preferences can shape the entire process.

The owner was clear that he did not want to work with private equity. That preference will shape every decision that follows: which advisor to hire, which buyers to target, and how to position the business. An advisor focused on financial buyers will run a different process than one focused on strategics. The owner’s instinct to avoid private equity was not just a preference. It is a strategic constraint that will guide the engagement.

Final Takeaway

The owner came to Axial after a deal fell apart, but he did not come looking for a quick fix. He came with a clearer sense of what he wanted, which risks mattered, and which buyers he wanted to avoid. That clarity made the next conversation more productive. The goal transitioned to finding an advisor who understands the business, knows the buyer landscape, and can position the supply chain issue as a manageable risk rather than a deal breaker. The best exits are not always the fastest. They are the ones built on preparation, positioning, and the right process.

Thinking About Selling Your Business?

Axial helps business owners explore their options and meet M&A advisors who specialize in their size, industry, and transaction goals.

For owners who want to better understand their company’s potential value, or evaluate whether selling is the right move, the first step is often just a conversation.

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