Deal Makers vs Deal Killers - What Buyers See That Founders Miss

What’s the difference between a deal that collapses and one that commands a premium?

In this episode of Buyers’ Frenzy, host Will Lindstrom sits down with Patrick McMillan, leader of the Transaction Advisory Practice at Amplio, to unpack the blind spots that founders often miss when selling their business - and the signals that buyers notice immediately.

Patrick shares stories from real transactions where owners either strengthened or destroyed their valuation by how well they understood their numbers, structured their processes, and built trust with their teams. He explains why knowing your margins, contracts, and financials cold is a “deal maker,” while disorganization - or worse, fraud - can slash value and stall transactions.

The conversation also explores the role of open-book management in fostering trust, mitigating blind spots, and enhancing performance. 

Patrick makes the case that transparency not only prevents fraud but also drives accountability, collaboration, and long-term value creation.

Highlights Covered:

• Why knowing your numbers instantly builds credibility with buyers
• How disorganization or fuzzy financials become instant deal killers
• A cautionary story of fraud that paused a deal and cut valuation in half
• Why monthly book closings and executive reviews are critical for exit readiness
• How open-book management builds trust, accountability, and performance
• Why more eyes on the numbers reduces blind spots and raises valuation.

Whether you’re preparing to sell or simply want to run a stronger business, this episode reveals how founders can turn potential deal killers into deal makers by tightening their numbers and opening their books.

Have insights on “Deal Killers”? If you’re a CEPA, CPWA, CFP, or fiduciary with experience navigating the hidden risks that derail deals, we’d love to hear from you. Connect with us on LinkedIn or at theculturethinktank.com/contact

Chapters

• 0:00 Introducing Patrick McMillan

Transcript

William Lindstrom: 0:00

Today I'm pleased to welcome Patrick McMillan. Patrick leads the Transaction Advisory Practice at Amplio, where he brings extensive CFO and Transaction Advisory experience, specializing in quality of earnings, financial due diligence and helping leaders prepare for exits and acquisitions. Over his career, patrick has advised companies across industries, guiding small and mid-sized businesses through the financial and cultural hurdles that often make or break a deal. He is known for combining technical rigor with people-first mindset, ensuring both the numbers and the leadership are aligned for success. So with that, I'd like to welcome Patrick. I appreciate you joining us here today.

Patrick McMillan: 0:38

William, my pleasure. Thanks for having me.

William Lindstrom: 0:40

Yeah, really appreciate it. One of the things that we keep coming back to are the deal killers and understanding and helping founders and leaders understand how to avoid them. What I'd like to talk about, or where I think there's a really big opportunity to kind of highlight, are not only what are the deal killers, but what are the deal makers, what's the difference between the two of them and what are the ones that founders just don't see. They either don't take advantage of the deal makers or they miss deal makers, or they just don't see the deal killers and they get in front of it. So, if you can put your CFO hat on and just kind of walk us through, what are these things that founders miss that improve the value but also just kill their value?

Patrick McMillan: 1:21

Again, I'm going to share a pro and a con. So the pro deal makers are knowing your numbers, knowing your metrics, knowing your business. There are so many founders I can talk with and I'll ask them okay, well, what's your gross margin, what's your landed cost, what's your unit economics, things like that. They'll spit it out and they know it. And then when I dig in and I start doing the diligence, they're pretty dang close. They're never exact, but they're close, they know. For example, I'm doing a roofing roll-up right now. We've got eight targets that ran. And some of those guys, they know their margins, they know what their roofing margins are, what their solar margins are and what their contractor costs are. And those are the ones that you know. They spent time in the numbers. You know that. They know their business, they know their costs and other subcontractors, employees, those right there impress me because if they know their numbers and they can have very solid conversations with anybody, with a buyer, with a banker, with an employee hey, I can't give you this raise, or I can, because this does or doesn't fit in with my numbers. Now the flip side is also. The opposite is true as well. If you don't know your numbers, that's a deal killer. I mentioned the eight targets in the roofing roll-up.

Patrick McMillan: 2:37

I just talked to the buyers today and one of his questions was Patrick, grade XYZ company and I said you know what? They failed, complete fail. Why did they fail? They don't know their numbers, the accountant doesn't know their numbers and they fumble every single time they talk. What I mean by that? They have several entities. Yes, it's complicated, but when I've asked them, the sellers, many times, hey, what's your revenue? They don't know. They keep guessing and it's varied. It ranges anywhere from 5 million to 15 to 25 million. Well, what's your margins? Oh, well, you know. Uh, it's between 20 and 80 percent. Okay, well, that's a huge swing. And so I'm actually presenting their numbers to them Friday and I'm very, very, very curious to see what their reaction is.

Patrick McMillan: 3:28

Nevertheless, when I was talking with the buyer on the phone and he said grade them, I said they fell, they don't know their numbers. How in the world are you going to incorporate them in a roll up when they're not even going to be able to tell you where they're at? Yeah, it's what you have an accountant and a CFO team for your accounting team, but you as the owner for you to make business decisions, you have to know your numbers. If you don't, then you have no business running that business. Know your numbers. That's an immediate red flag.

Patrick McMillan: 3:57

If you don't, another one is a big red flag and I've come across this not often, but a couple of times fraud. And I'm not talking about fraud from an owner standpoint, I'm talking about fraud from any standpoint. A couple of years ago, I worked on a project where one of the partners was stealing money from the company and the other owner did not know about it, did not have any insights to it, and that caused a huge debacle between both owners, between the executive team and I was doing quality ratings on them helped them to fire their other. It was not my firm, but another fractional CFO firm. We fired them Because they didn't bring up the red flags.

Patrick McMillan: 4:40

That was a huge issue. That was a big, big, big deal and literally that paused the deal. They had to clean everything up. Had that fraud not been happening even if I removed the numbers and the fraud not been happening because of the economics of the market that company would have sold 2x higher than what it could have sold for today. Wow, they left a lot of money. A lot of money.

William Lindstrom: 5:08

So when you look at people, I don't know if it's messy books or what it is, but what leads to them not knowing their numbers? Is it a personality thing, is it? Or is it just the way they do business is so disorganized they can't collect the numbers, or what kind of is the root?

Patrick McMillan: 5:23

cause and I'll tell you how to counter all of those, any or all of those. Okay, every company I don't care if you're a small $500,000 company or even $200,000 company, all the way up to a $2 billion company you need to close your books every month. Now, whether you have an in-house controller or a fractional controller, someone who knows what they're doing, you need to close the books. What does that mean? It means you've got to reconcile the bank accounts. Not just that A lot of people think, oh, that means close my books. I've reconciled my bank accounts, that's part of it. But you also have to go in and reconcile all of the balance sheet accounts. Okay, if you have any accruals, you have to go through and reconcile those. If you have any adjustments, you have to reconcile those. If you have any pre, I mean there's so many things. Number one reconcile your numbers, your books, balance them out and close your books. Close meaning lock them. Don't make any more changes historical behind that time, okay. And then, number two you need to review those with your executive team, not just yourself, not just the owners, but the executive team, the people who are making decisions. You need to review those at least every month.

Patrick McMillan: 6:40

William, when I was a CFO of a conglomerate of companies, every Monday morning our executive team met for three hours and we reviewed every single thing in the books. I led the meeting and we had a three-hour meeting. We reviewed everything from customer stuff, from sales orders to revenue, to deposits, to AR. We, on the flip side, did everything with accounts payable and vendors. We reviewed the open purchase orders, the pending purchase orders, the vendor bills, the payments of the vendors and the AP report. We reviewed cash flow and then we reviewed all the op-eds and I did that with every single manager of each division weekly.

Patrick McMillan: 7:22

If you do that, then you know your numbers, you see what's going on. There were so many questions but everything was addressed during that time because we had literally everybody at the table. I didn't know all the answers, but if Susie over here asked a question that I didn't know to, a lot of times Johnny in sales said oh, that's a sales order that we closed and here's what's going on with it, here's the adjustments that we've got to make to it, and so we're able to really understand the numbers that are going on. And so if you're doing that on a regular basis, at least monthly, then you can identify things like fraud that might be happening. You can identify numbers that are incorrect. You can identify loopholes that are happening in your business.

William Lindstrom: 8:08

So I think and if I'm hearing correctly it's just not the financial, because you were talking about, like sales orders and CRM data and marketing days. So it's actually just getting your arms around all the data and just being able to look at it in a simple dashboard, because it sounds like a lot of work. But if it's only an hour or two a day, then every or a week or a month, whatever it may be. I've studied this concept of open books. But when you have an open book concept within a company, how does that affect the people within the workforce as well? Because it's not just fraud, but it also will change performance, at least according to the theory.

Patrick McMillan: 8:43

I love the concept of open books and actually I remember first hearing about it roughly 20, yeah, about 20 years ago, and I'm impressed that not a lot of companies do it still. And for those listeners, open books means a company will actually have somewhere, whether it's on a server or something. Okay, everybody in the company employees, everybody can actually see the financials, they can see the income statement, they can see the balance sheets, they can see all the data that leads into that. So it's completely open. I love that and I'm not saying everybody should do it, but I love that the companies that do it.

Patrick McMillan: 9:16

What it does is it actually builds trust because, as an employee, if they can see what's on the balance sheet, yeah, they may say, oh my gosh, you know how come that company has $5 million in the bank account. But over time they're going to see how that $5 million and how it actually runs into the networking capital and what that's utilized for. They're going to see that new machine or new building, expansion or something that has to happen. Or they're going to see, hey, you know what, that's how I'm getting profit share, that's how I'm getting, you know, as a shareholder, dividends, you know, or something like that so they can really see that and it builds trust and that way too. If they see that bank account going down over time, then they opens up questions. They can go in and say, hey, owner, I've seen this going on and I'm kind of concerned. It just opens up that communication and that builds that trust in what's going on. And trust is a huge deal whether you're in as part of a transaction or it's just in a company in general.

William Lindstrom: 10:16

And I know that some people are hesitant to do it. Is there really any risk? I mean as far as opening up your books for a competitor sees them or something like that. I mean, is there how much risk are you really exposing yourself to if you let your staff see the numbers?

Patrick McMillan: 10:32

There's always risk. It's whether you can stomach it or not. So to your point about competitors seeing, think about public companies. Warren Buffett used to buy one share in all of his competitors so that he could get their financials and see what they're doing. Actually, think rising tide lifts all boats. I like talking with other QV providers because it helps me to see what they're doing and I share with them what I'm doing. I share with them my margins. We talk about things like that and some of them will talk with me, some of them won't. But rising tide lifts all boats. So what If competitors can see what your margins are and what you're doing? Yeah, there's a risk, there's an inherent risk with that. But you know what? If you can stomach that, if you can be okay with that risk and know that your competitor may beat you out in pricing, then have a pricing war. Why do you think?

Patrick McMillan: 11:24

Gas stations are across the street from each other sometimes, or even restaurants. There's a study done. I can't remember who or by when, but it's always impressed me. Competition actually drives margins. It drives people. It's so good. I love competition. It's so uncomfortable, but it's so good. I'm a fan of open books. I hope more and more companies do it.

William Lindstrom: 11:47

Yeah, no, that's a really good insight and I think what it does is. This whole little conversation was about the blind spot for founders and preparing for sale. But if you have more eyes on, you're going to have more accountability, you're going to have more cooperation, you're going to have more communication and you're probably going to have a greater likelihood of avoiding those blind spots.

Patrick McMillan: 12:06

I think that's a great way to put it, and that's so true.

William Lindstrom: 12:10

Yeah, no, I really appreciate that because I think that whole concept of open books and blind spots go hand in hand with leaders and founders, especially if they're preparing for sale, because if the whole company is pulling together, your valuation is only going to go up.

Patrick McMillan: 12:23

Yeah, exactly Good point, thank you.

William Lindstrom: 12:26

Well, no, I really appreciate it. Again, thank you so much for your time and would love to stay connected and keep having these conversations with you.

Patrick McMillan: 12:33

Let's do, please do. I'm excited to hear more about your research and how it goes. And, yeah, when you publish it, I'd love to read it.

William Lindstrom: 12:40

All right will do. I will definitely share all of that good stuff.

Patrick McMillan: 12:43

Nice Sounds good. Thanks, man.

William Lindstrom: 12:45

Thank you.

Patrick McMillan: 12:46

All right.