So a DSO showed interest in you, gave you a letter of intent, and started all their due diligence.

But then …

They decided NOT to proceed.

Why would that happen?

In this email I’ll breifly talk over the first main reason, and then I’ll get into the second main reason in the next.

The first is about how the earnings analysis holds up.

If initial assumptions regarding the numbers fail to hold up during the Qualify of Earnings analysis.

Usually if this happens, it leads to a re-pricing discussion.

But, the outcome of this discussion is typically found to be unsatisfactory by one of the two parties involved.

The Quality of Earnings analysis is a deeper dive and more comprehensive review of your financials and usually adjusts from a cash basis method of accounting to accrual.

So if the numbers presented initially aren’t in alignment with their analysis, in order for the DSO to proceed, they would need to make some kind of adjustments to their preliminary analysis.

Depending on how great those adjustments are, you may not like what they have to say …

And if you and the DSO can’t come to an agreement then they may walk away.

Honestly, if you aren’t going to get the deal you want, then that may be the best thing anyway.

But you also may want to consider your perspective and expectations.

Just food for thought.

More in the next email.