The Anatomy of a Broken Deal

Most deals that collapse in diligence do not die of one dramatic surprise. They die of a number that will not hold up — an EBITDA add-back with no evidence, a working-capital target nobody can agree, a debt-like item found late. This briefing looks at where UK private transactions below £100m enterprise value actually fail or reprice, using the strongest public evidence available: broken-LOI data, warranty-and-indemnity claims studies, and purchase-price -adjustment research.

There is no single UK dataset that tracks sub-£100m deals from signed heads of terms through completion. Rather than invent false precision, the report triangulates several populations and is explicit about what each can and cannot show.

Key findings

• Earnings-quality overstatement is the clearest identifiable deal killer. In Axial’s 2025 analysis of 75 unsuccessful lower-middle-market transactions, 21.3% of broken executed LOIs were attributed specifically to quality-of -earnings EBITDA discrepancies; explicit QoE and other diligence findings together accounted for 46.6%.
• Concentration and material-contract problems are real walk-away risks — but the public data does not isolate their frequency, so they are best treated as high-impact rather than high-probability.
• Working capital is the most common repricer, rarely the sole killer. Across 1,570+ completed private-company deals (SRS Acquiom, 2026), 91% had a price-adjustment mechanism and 51% ultimately settled buyer-favourably, at an average of 0.76% of transaction value — usually a true-up, not a deal-ender.
• Off-balance-sheet and debt-like items are less visible but severe. Financial-statement breaches ran at roughly 20% of notified W&I claims but ~45% of claim payments (Marsh, 2024) — low frequency, high cost.
• Undisclosed related-party dealings are the least statistically visible category — hard to quantify, but they corrode trust in every other number.

What the full report covers

The full briefing works through an executive summary, quantitative findings at a glance, the evidence base and its limitations, a root-cause analysis of each failure mode, where in the diligence timeline deals typically break, an evidence-weighted ranking, and the implications for UK buyers — with sources.

Download the full report below for the complete analysis and references.