Most owners assume the things that go wrong in a sale come from the other side of the table—a sharp buyer, a soft market, a multiple that didn’t hold. The uncomfortable truth, drawn from more than 200 closed IT deals, runs the other way: the biggest regrets are almost always self-inflicted, and almost always preventable.
This episode of Cogent Conversations digs into the regrets that actually haunt MSP owners after the wire clears—and dismantles the myth of the “evil buyer” that distracts everyone from them. The rare deal that truly detonates almost never traces back to a predatory buyer. It traces back to a seller who wasn’t honest, a deal structured badly, or a business that wasn’t run tight enough to survive diligence. The good news: every one of those is a problem you can fix long before you go to market.
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Key takeaways from this episode
- Honesty is the whole game—everything else is noise. Across hundreds of deals, the handful that went bad share one root cause: a seller who wasn’t straight. Buyers are trying to acquire good people and good client relationships so everybody prospers. Misrepresent the business and your earnout is exactly where it comes back to bite you.
- The “evil buyer” is mostly a bedtime story. Most buyers are honest, capable operators—which is precisely why they built companies successful enough to buy yours. Do your own reciprocal diligence on the buyer and a genuinely bad actor usually outs himself well before closing.
- You can’t fix being full of it after the fact. Misrepresent your customer relationships and the truth surfaces fast—clients bolt, the earnout shrinks, and the money you bargained for evaporates. Being truthful isn’t the noble option; it’s the one that actually gets you paid.
- Earnouts only deserve their bad name when they’re built on “unobtanium.” Tie an earnout to EBITDA and you’ve signed up for endless arguments, because EBITDA isn’t real GAAP accounting—it’s a nickname, and a manipulable one. Tie the earnout instead to something clean and countable, like gross revenue that actually shows up, and it becomes simple, fair, and almost impossible to game.
- Some founders just miss the chair. Plenty of sellers join the acquiring company as senior executives and thrive. A few wake up a few months in unable to stand that they can’t write themselves a bonus check anymore—and they self-select out. It’s rarer than the fear of it, and playing well with the new team works far more often than owners expect.
- Run your staffing “just right” or pay for it in diligence. Too lean and you’re running hot—free cash flow is overstated, and a buyer will hit you with a negative add-back to put the missing people back in the seats. Too fat and you’re leaving real profit on the table. The gut-check worth sitting with: how much more business could you do without adding anyone? Around 10–15% is healthy. If the honest answer is 30–40%, you’re overstaffed. If it’s “I need five people today,” you’re running too hot to sell.
The thread running through all of it is the one that anchors the whole series, and one Rick Murphy comes back to constantly: run the business honestly and tight, today, and most of the regrets never get the chance to happen.
That kind of straight, unvarnished read is exactly what owners come to Cogent for. If you’d like an outside perspective on how your business would actually hold up under a buyer’s diligence—structure, staffing, and all—we’re always happy to talk it through.
