Every buyer falls into the same trap at some point:
You spend weeks on a deal… maybe months.
You’ve met the founder. You’ve paid for diligence. You’ve already started imagining the growth playbook.
And even as the red flags pile up, you keep pushing forward.
Why?
Because you’re already emotionally invested.
The hardest part of buying a business isn’t finding a deal.
It’s knowing when to walk away.
Here are a few mental models I use to make that decision clear.
1. The “If This Were Public” Test
Ask yourself:
If this company were a stock, would I buy it today at this valuation?
It removes the story, the founder charisma, and your sunk costs, forcing you to judge it as just another asset.
2. The Two-Sentence Rule
Can you explain the deal to a smart friend in two sentences and have them say “that makes sense”?
If you need to explain away 10 caveats, it’s not a good deal.
Good deals are simple. Bad deals require storytelling.
3. The Asymmetric Risk Check
Flip the question:
If everything goes right, what’s my upside?
If things go wrong, what’s my downside?
If the downside is permanent (legal liability, churn cliff, unfixable codebase)… walk.
4. The Opportunity Cost Lens
Every bad deal you chase = 6 months you’re not chasing the good ones.
The deal you don’t do is often the most profitable decision.
5. The Gut Check
If you’re staying in the deal just because you’ve “come this far,” you’re in sunk-cost territory.
Your gut isn’t noise, it’s your brain picking up weak signals.
Listen to it.
The Takeaway
Great buyers aren’t just good at spotting opportunities.
They’re great at saying no, and walking away clean.
Deals come and go.
Capital and time are finite.
The ability to walk away is your greatest edge.
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