Worst mistake you've seen during a deal

We all know the dreaded feeling that lingers at the back of your mind that you might miss something/make a mistake that costs you a deal and your job. Therefore, I thought it would be fun to hear some horror stories of mistakes.

Probably the most impactful mistakes I have seen:

  • Initial offer was performed without support (only the lawyer was involved on the buy-side). The seller (with full support) managed to get the language into the heads of terms that the buyer would cover any working capital requirements at acquisition. Once the buyer bought support in it was clear this company had been operating at a significant negative working capital meaning a ~+10% increase in purchase price. Buyer was furious and it took about a week of endless days to get the UW adjusted and agreed. Luckily, the target company was performing very well and there was wiggle room for the hit. Unfortunately, I heard that once the acquisition completed the buyer owed a further ~5% due to the seller's clever FDD locking in a 12 month normalised position in the most favourable month (meaning the buyer had to cover a further working cap gap). I was shocked this ended up completing and I was so glad the error was made before we were involved. 
  • Seller was literally in litigation with 45% of its revenue. The legal team doing diligence didn't pick this up until about a week before signing the sales agreement. Seller promptly sent a disclosure letter stating that the litigation would continue after acquisition... Fortunately I hated the deal, so I was happy to see it go, but finding something that huge, that late in the day. I just couldn't believe what I was hearing. LDD definitely didn’t receive their full abortion fees on that one hahaha. 
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