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Dead Deal Report: Unpacking 2023’s Broken LOIs


There are numerous factors that can lead to the breakdown of a deal, including financing challenges, discrepancies in EBITDA evaluations, and findings uncovered during due diligence, among others. However, with the complexity of LOIs and the unique deal structures we’ve been seeing in our Winning LOI series, we know that pinpointing the exact cause is seldom straightforward. 

With that in mind, we examined a selection of 2023 Axial-sourced deals with executed LOIs that didn’t result in a closed deal. The below results were compiled and anonymized based on 47 unsuccessful deals across 7 buyer types and 12 industries. We are grateful to the Axial members who provided the data and useful color on these transactions.

Broken Executed LOIs By Reason


Investor Type




Independent Sponsor Food & Hospitality Valuation Misalignment The real estate valuation came in much lower than expected, which impacted financing. The seller was not willing to bridge the gap at that time.
Individual Investor Healthcare Seller Backed Out The seller was dealing with some serious family issues and no longer intended to sell his business.
Private Equity Industrials Couldn’t Secure Financing The buyer had to pull out because their fund was not investing in the US for the next 12 months
Independent Sponsor Technology Non-QoE diligence finding There were a lot of reasons, many of which can be summarized as diligence and risk issues around assets, people, customers, etc.
Search Fund Transportation Other The buyer liked the courier deal but ultimately did not have the capacity to close that deal and two others they were working on at the same time.
Holding Company Industrials Couldn’t Secure Financing The bank could not fund the deal due to a tax issue on the seller’s end.
Independent Sponsor Transportation Valuation Misalignment The buyer was acquiring both OpCo/PropCo as part of the deal, and the real estate value started to dwindle given current market conditions (real estate prices + interest rate environment), so the deal no longer made economic sense.
Corporation Technology Other The buyer’s board did not approve the deal as presented.
Independent Sponsor Business Services QoE EBITDA Discrepancies QoE came back substantially low and the buyer and seller were not able to agree on a renegotiated price.
Search Fund Industrials QoE EBITDA Discrepancies QoE EBITDA was 30% below management’s assertion in the CIM.
Independent Sponsor Healthcare Valuation Misalignment The buyer was not able to form a consensus with the seller on the true value of adjusted EBITDA on both an LTM and NTM basis.
Holding Company Industrials Other One of the acquisition partners withdrew from the deal.
Family Office Financial Services Non-QoE diligence finding The buyer ended the process due to some diligence findings that contradicted their initial underwriting of the opportunity.
Search Fund Business Services Seller Backed Out The seller could not get comfortable with the due diligence process and backed away from the offer.
Private Equity Energy & Renewables Couldn’t Secure Financing This transaction was under LOI with a large, well-known private equity group that was using a large NY money center bank for the debt portion. The bank informed the PE firm that they were no longer going to fund any oil and gas transactions.

2023 Deal Data | Broken Executed LOIs

Last year, Axial launched Exit Ready, a bi-weekly newsletter that distills the best content, tips, and guides for exit-minded business owners. Below are a few resources from the newsletter that we hope are helpful and can aid in better preparation for the transaction process.

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To help Axial members avoid financial diligence blow-ups, we’ve secured several preferred relationships with respected lower middle market QoE providers. If you’re an Axial member and need to put a sell-side or buyside QoE in motion, let us know here. We’ll be happy to make some introductions.

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