Why Deals Die

What this report finds

A founder who signs a letter of intent feels the deal is done. It is not. The riskiest part of a sale begins at the LOI, in confirmatory diligence, and a large share of signed deals never close, or close on materially worse terms than the term sheet promised.

Deals fail at every stage of a sale, but not evenly. Understanding where failure concentrates tells a founder where to focus the preparation that prevents it.

Deals die for reasons that fall into a small number of categories. The taxonomy below names them, because a founder who knows the categories can prepare against each, rather than worrying about deal failure in the abstract.

A dead deal is painful, but a retrade can be worse, because the founder, having lost leverage and alternatives, often accepts a materially worse deal rather than walk away with nothing. Understanding how a retrade works is how a founder resists it.

The abstractions become concrete in the arc of a single failed deal. The illustrative sequence below is composed from the common pattern, and it shows how a strong company and a real buyer end with nothing.

A buyer who walks loses some fees and a few weeks. A founder who watches a deal die loses far more, and the full cost is rarely appreciated until it is paid. Understanding the stakes is what justifies the preparation.

Windsor Drake’s research desk compiled this report from transaction data, public filings, and the firm’s sell-side advisory work in software, fintech, AI, and cybersecurity. It is intended to inform founders, owners, and acquirers evaluating a transaction, and does not constitute investment advice.