One in three signed LOIs never closes.

Why do signed deals die?

A signed letter of intent is a decision to look, not a decision to buy. Roughly 30–35% of signed LOIs fail to close, with the lower middle market skewing to the higher end of that range; around 60–70% of launched sell-side processes ultimately reach a transaction, which means 30–40% of mandates die before one.

This is ordinary rather than aberrant, and it is cyclical: the 2008–2010 window saw more than two thousand reported transactions derail. A firm that has only run winners is unprepared for the arithmetic of the market it operates in.

What kills them, by the numbers

Taken together, quality-of-earnings gaps and every other diligence finding account for roughly 46–47% of dead deals. Nearly half of failures happen because a buyer looked closely and disliked what it found.

Financing has receded as a stated cause, falling to 10.7% in 2025 from 21.3% in 2023 as credit eased. It has not disappeared. Interest coverage on mid-market deals compressed from 6.0x to 2.9x of EBIT to interest over 2025 (Capstone Partners Middle Market Valuations Index, 2025), which leaves a buyer far less room to finance through an earnings miss than the headline share suggests.

Framing changes the answer, and it is worth saying so. A separate 2026 Axial survey asked what most often killed deals in 2025, a different question from the cause distribution of a fixed set of dead deals. It put valuation at 28.3%, diligence at 24.5%, macro conditions at 20.8% and financing at 17.9%. Diligence and price sit at the top of both readings.

What the 70% number actually means

The most quoted statistic in M&A is that 70% of deals fail. It does not measure what most sellers are told it measures.

That figure describes post-closing value creation. Studies judge somewhere between 30% and 70% of completed acquisitions to be failures on post-close metrics such as returns, integration, and retained value, depending on the metric chosen (Bruner, Deals from Hell; Sherman, Mergers & Acquisitions from A to Z). It says nothing about the probability that a signed deal reaches a closing.

The two questions are separate, and conflating them distorts both. It makes getting to a closing look more perilous than the evidence supports, and it makes the years after a closing look far safer than they are.

What sellers can control

Read the cause distribution again and note how little of it is market conditions. A quality-of-earnings gap is a preparation failure: the real number was always the real number, and the process discovered it in front of the buyer. A retrade over a diligence finding is a disclosure failure. Customer concentration, where a single customer above 30–40% of revenue is a frequent mid-market kill, is a positioning problem that is cheaper to address before a teaser than after an LOI.

Two causes genuinely sit outside a seller's control: financing conditions and a buyer's own change of posture. Everything else on the list was, at some earlier point, a decision about how much work to do before going to market.

Vendor quality of earnings commissioned early is the highest-return spend available on a founder-owned business carrying heavy add-backs. It pre-empts the retrade, reduces friction with representation and warranty underwriters, and removes the single largest category of deal killer from the table before a buyer is in the room.

The controllable failure causes are, almost without exception, preparation failures. Which is the argument for preparing before you go to market rather than during.