Thread by @tsludwig

A short story about deal making:

I had a very nice company under LOI, had built a great relationship with the sellers, and everything was marching towards closing.

There was just one lingering issue: negotiating market-rate rent, which we'd estimated in the LOI.

1/6

It is 2 weeks before closing, I'm big, big $ into non-refundable diligence costs, and already planning for the transition.

My phone rings. It's the seller saying we need to talk about the rent. He asks where I think we are on terms? Referencing the LOI, I tell him.

/2

He pauses, says this is uncomfortable, but that he insists on a material increase (~15% change in pro-forma EBITDA). Then, silence.

He says he wanted to tell me much earlier, but the brokers told him to hold-off and that he, rather than them, should deliver the news.

/3

Gathering my thoughts, I say ok, but only if we reduce the purchase price. No go. After 48 more hours of unfruitful negotiations, we part ways. The deal dies. My diligence money is gone.

Ultimately, I think the brokers tanked the deal, but at the time, I wasn't sure.

/4

This deal triggered the most severe anxiety I've ever felt. I developed arrhythmia, insomnia, and felt really awful for a few months, even seeking out medical advice due to the symptoms.

Easy to talk about success, but getting there is seldom easy.

/5

Fast forward six months. Sellers reach out w/ update. They never sold, fired the brokers, and still see me as preferred buyer, if and when I choose to re-engage.

Key lessons: There is no substitute for integrity. Maintaining discipline is really hard sometimes.

/fin