When I started out as an M&A advisor, every time an entrepreneur told me they had already tried to sell their company before, my instinctive reaction was the same:
“Ugh, just what we needed—they’ve already gone to market and didn’t sell.”
Over time, my perspective changed. As discussions progressed, I realized that most of those entrepreneurs had reflected deeply on the experience, and almost all of them ended up asking the same questions:
“Do you think we can go back to market?”
“Do you think we’ve burned the asset and need to wait five years before trying again?”
The answer almost always starts with understanding why the previous process failed.
In my experience, there are seven major categories of reasons.
Many processes fail not because of price or market conditions, but because the company enters due diligence with issues that could have been fixed beforehand. Excessive founder dependence, financials not prepared on an accrual basis, informal customer contracts, overly aggressive EBITDA adjustments without proper justification, or relevant tax and labor contingencies. These issues create distrust among buyers and, at best, lead to price reductions or tougher terms, and at worst, kill the deal.
In venture-backed companies, it is common for there to be pressure to exit at a time that may be right for the fund (due to its own timelines and LP obligations), but not necessarily for the company. As a result, some companies go to market before they are truly mature—startups without product-market fit, insufficient scale, or a clear path to profitability. The market perceives this and either refuses to meet valuation expectations or doesn’t even make an offer.
If the process starts during adverse macro conditions—war, a sharp market downturn, rapid interest rate hikes, or a pandemic—the risk environment discourages buyers regardless of the company’s quality.
There are sectors where, at a given time, there is simply no buying activity. No private equity-backed platforms making acquisitions, no roll-up strategies, no international players entering the market. Without that underlying dynamic, the buyer universe shrinks significantly and processes fail to progress.
The seller has a number in mind (an EBITDA or ARR multiple, or a total valuation) that does not necessarily match what the market is willing to pay. It is not necessarily a “wrong” valuation—it is simply theirs: what they want to receive for what they have built. When this expectation does not align with market reality, offers fall short, negotiations stall, and deals fall through. A classic in M&A.
This can take many forms. An advisor without real sector experience who doesn’t understand valuation drivers in that specific market. Lack of chemistry or trust with the entrepreneur, which becomes critical in a multi-month process. A large, reputable firm that, once the mandate is signed, delegates the work to a junior team without the necessary experience or weight to engage with buyers. Or simply poor execution. A good advisor is not just someone who finds buyers—it’s someone who manages the entire process without letting it fall apart.
Problems may arise during due diligence, negotiations may deteriorate, a key customer may be lost before closing, or the business may change materially during the process. The buyer may also lose interest or simply cool off. But one cause deserves special mention: choosing the wrong buyer from the start. Not every financially capable buyer is the right strategic or cultural fit, and that mismatch can kill even a well-run process.
When I analyze a company that previously went to market and didn’t sell, the most important question is not how much time has passed since the last process. The question is whether the issue that caused it to fail has been solved.
If it has been solved (and no new issues have emerged), it may make sense to try again. If it hasn’t, then time is irrelevant. Going back too early just repeats the same mistake.
If it was expectations: the question is whether the gap between seller expectations and market reality has closed—either because the market improved, the company grew into its valuation, or the seller adjusted expectations.
If it was macro: some shocks resolve in weeks; others, like deep recessions or financial crises, take years. The key is whether the deal environment has normalized.
If it was lack of market consolidation: you need to see renewed buyer activity—new PE-backed platforms, returning funds, or international entrants.
If it was company-related: you must ensure the issues found in due diligence are fully resolved.
If it was too early: only return when the company has reached true maturity.
If it was the advisor: the easiest fix—change advisors.
If it was process-related: depends on whether the issue was temporary or structural.
Not necessarily. If conditions change, internally or externally, it may make sense to proactively contact buyers who were close or previously interested. In some cases, the process can be resumed without a formal relaunch.
It is worth reviewing the contract with the previous advisor. Most include a “tail clause” that may require paying a commission if the company is sold to a buyer they introduced, even if the process was interrupted. This clause typically lasts around two years after the mandate ends. Options include waiting for it to expire, accepting a double fee if the buyer comes from that list, or considering re-engaging the same advisor if they performed well.
“We already went to market, didn’t sell, and now everyone knows we failed. No one will want to buy until they forget.”
In practice, this is usually not true.
Imagine 100 potential buyers were contacted. The first contact is a blind teaser, a one-page anonymous document. Only about 15 sign an NDA and see the information memorandum. Most of the market never learns which company was for sale.
If the process is relaunched two years later, the 85 buyers who never went deeper will see it as a completely new opportunity. The teaser can also be adjusted so it doesn’t look identical.
The buyer universe is also not static: new PE funds appear, strategies change, and companies that weren’t buyers before may now be active. Even those who saw it previously may now have different priorities or more appetite.
When I started, I tended to avoid companies that had already tried to sell without success. Now I see it differently.
One of the hardest parts of an M&A process is not finding buyers or negotiating price—it is managing the seller’s lack of experience. Most entrepreneurs are extremely smart and know their business better than anyone, but they have rarely sold a company before.
Processes tend to run more smoothly with entrepreneurs who have already been through a sale—or a failed one. They understand due diligence, SPAs, and the complexity of closing. Expectations are better calibrated.
A failed process often means the company has had time to fix its issues. If not, I will say it is still too early. But if they have, the chances of success are significantly higher.
So now I actually like second-time-around deals.
By Joshua Novick, partner at Bondo Advisors
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