Looking Forward to Exit? Not So Fast

By Ryan Kuhn. Since Ryan founded M&A advisor Kuhn Capital, the firm’s principals have initiated 80 mid-market tech industry M&A transactions worth more than $3 billion.

According to extensive research, the average percentage of mid-market companies (companies with sales of $10M–$100M) that fail to sell after attempting to do so is shocking. Avoid the mistakes that kill 75% of seller M&A campaigns by learning what they are.

(FYI, owner-led (DIY) sale campaigns have a failure rate of over 80%, and even campaigns managed by professional M&A advisors still close only 55% of the time.)

What’s the Problem?

Researchers say the causes listed below are to blame. What strikes me about them is that most didn’t have to happen. (Since some companies suffer multiple causes of failure, the total below is 230%. To better isolate the relative contribution of each cause, I’ve normalized the total to 100% in the following chart.

Now it’s even clearer that there are only two factors not fully within the owner’s control, and they are also the two least important ones. Even then, choosing to go to market despite weak “Financing Environment/Market Conditions” is often the owner’s choice, and “Integration/Culture Issues” ought not to be a problem if a sell-side M&A advisor attracts multiple suitors.

Rather, I believe a major cause of failure, one that the researchers seem to have ignored, is the unwillingness of many buyers to “catch a falling knife.” That is, it’s quite difficult to sell a company with shrinking margins or revenue, or material potential liabilities. (Excepting, of course, hot tech startups and companies that own valuable IP.) Perhaps the “Unrealistic Valuation Expectations” cause of failure listed above partly captures buyers’ aversion to those falling knives?

Then, What Is to Be Done?

Professional M&A advisors can help their sell-side clients avoid nearly all these missteps (e.g., curbing exuberant valuations, running a tight preparation process, avoiding due diligence surprises, etc.)

But if value-reducing issues are such that advisors can’t help (like operating deficiencies), they should at least warn the weaker seller to brace for a rough landing. In fact, in more extreme cases, they should do their prospective clients a solid and suggest that they consider canceling their exit plan to focus instead on enhancing company performance.

Yet sometimes advisors don’t do that because — gasp — they’d lose out on retainer fees. Seller beware.

So, Such Risk-Averse Buyers Do OK, Right?

No. Another surprisingly poor M&A showing is engineered by buyers, who, on average, fall short of their expected ROI on closed deals about 70% of the time. Even worse, a substantial number of them destroy value in the process of acquisition. See details on this whole other fresh hell and its causes in a related Kuhn Capital article, The Top 7 Ways Buyers Blow Up Deals.

Lest all this threatens to dampen your animal spirits, press on. You have many ways to improve your odds, and they start with knowing and then acting on ways to avoid the biggest causes of deal failures.

Got comments or questions? Email us.
Article revised 2/3/26. © 2026 Kuhn Capital, Inc. All Rights Reserved