Every year, billions of pounds of deals collapse. Not because the businesses were bad. Not because the market turned. Not because the buyer got cold feet.
Every year, billions of pounds of deals collapse.Not because the businesses were bad. Not because the market turned. Not because the buyer got cold feet.
Because the company could not prove what it said it was.
That is the uncomfortable truth behind the statistic that over 60% of transactions fail or reprice significantly during due diligence. It is not fraud. It is not deception. It is unpreparedness. And it is so common, so structural, so accepted as part of the process that most advisors do not even flag it as a risk until it is already happening.
Here is what actually goes wrong.
The diligence request arrives. The scramble begins.
When a serious buyer, lender, or investor decides they want to move forward, they send a diligence request list. It is, in most cases, extensive. Contracts. Financial statements. Customer data. Employee agreements. Regulatory filings. IP documentation. The list goes on.
For a company that has been focused on building, which is every company that is worth acquiring or investing in, this list lands like a grenade.
Suddenly the finance team is pulled off its actual work. The CEO is spending hours in document review rather than running the business. External accountants are being chased for reconciliations that should have been ready months ago. The legal team is hunting for contracts that may or may not have been signed correctly, filed correctly, or filed at all.
This process takes weeks. Sometimes months. And while it is happening, the other side is watching.
Delay is not neutral.
Every week that passes in a diligence process is a week in which the capital side's conviction either grows or erodes. In most cases, it erodes.
Because delay signals disorganisation. Disorganisation signals risk. Risk gets priced.
The lender raises the rate. The buyer adjusts the multiple. The investor renegotiates the valuation. None of this is announced. It happens quietly, through revised term sheets and updated models and conversations you are not in the room for.
By the time you close, you have given back significant value. Not because your business got worse. Because your evidence got messy.
The problem is not the diligence. It is the gap.
Due diligence, in principle, is a reasonable thing. A buyer or lender should be able to verify what they are being told. That is fair enough.
The problem is that most companies maintain their data for operations, not for scrutiny. Financials are built to help you run the business. Contracts are filed to be accessible when you need them. Data is organised in whatever way made sense at the time.
None of that is organised for the moment when someone wants to verify everything at once, under time pressure, with significant money on the line.
That gap, between how a company exists and how capital needs to see it, is where deals die.
What changes this.
The companies that close cleanly, on the terms they want, are not necessarily the best businesses in the room. They are the most legible ones. The ones whose evidence is organised, maintained, and ready before anyone asks for it.
That is not luck. That is preparation. And preparation has historically required months of expensive, disruptive manual work right at the worst possible moment.
It does not have to. But fixing it requires understanding that the problem is not the diligence process. The problem is that nobody was watching before the process began.
That is the gap Tobin closes.