What To Do When a Deal Falls Through

One of our best clients let us know yesterday that a deal we all thought was complete fell through at the last second.

This was on a raise that we were scheduled to have done in 45 days, and had insane demand for - we even stopped all outreach because our client was working through the final steps of the term sheet and didn’t have time to entertain any other offers.

All for it to fall through the cracks right at the last second.

This happened last year as well with a 30M LBO for a private equity firm we sourced for came apart right as it seemed it was going to be completed.

Here's the part I want to spend the most time on, because "don't let it get to you" is advice everyone gives and almost nobody explains.

There are two ways founders react when a deal falls through. Call them Camp 1 and Camp 2.

Camp 1: Shut It Down

The investor passes, the LOI falls apart, the term sheet gets pulled - and the founder goes quiet. Outreach stops. Calls get pushed. The whole raise stalls because one deal inside it died. I've watched this happen on our own mandates. One no turns into a two-week gap in the pipeline, and that gap costs more than the deal itself ever would have.

Camp 2: Pretend It Didn't Happen

The opposite trap. No reflection, no debrief, straight back into outreach like nothing happened. This feels productive. It isn't. You skip the one thing that makes the next round of conversations sharper - actually understanding why this one fell apart.

Both camps are wrong for the same reason: neither one treats the fallen deal as information.

Find the Real Reason

Before you do anything else, separate the two things that can kill a deal: timing and fit.

• Timing is fund cycle, partner bandwidth, macro conditions, a portfolio conflict that surfaced in week three.

• Fit is something about your story, your numbers, or your ask that didn't hold up under real scrutiny.

  Timing deaths are not a referendum on the company. Fit deaths are - and they're the ones worth sitting with for an afternoon before you move on.

Go Back to the Well

A deal falling through doesn't mean the relationships inside it are dead. The investor who passed on stage - keep them warm for the next round. The conversations that went quiet three weeks ago because your bandwidth went to the deal that just fell apart - that's your first stop, not a cold list. We see this constantly on our mandates: the fastest way back into momentum is reactivating people who already know who you are, not starting from zero.

Don't Let One No Be the Whole Story

A raise is a portfolio, not a single bet. If you're running it like one - all your energy on the deal that felt closest to done - a single loss takes the whole thing down with it. Keep multiple threads moving at all times, so no single no has the power to stall you.

I hope this is useful next time a deal falls through on you, because it will happen again, on this raise or the next one.

These things are very normal, they happen all the time, and you shouldn’t let it throw off the rest of your efforts.

Ryan Bryden
Breakout Capital Group

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