The agency whose numbers wouldn't survive a new owner

A mid-market private equity firm was preparing to acquire a marketing and creative agency for $4M — a 5x multiple on $800K of reported EBITDA. Quality of earnings work had cleared the books. Tax returns matched bank statements. Customer concentration looked manageable across 35 active accounts. On paper, this was a clean deal.

Across all five assessment lenses, the agency triggered critical findings. The pattern was consistent: revenue, execution, and cost decisions all lived in the founder's head, with no governed system capable of producing them after a handover.

Two hundred invoices were issued over eighteen months with no underlying client contracts. Revenue recognition relied on the founder's monthly judgement, not a governed rule. Twelve credit notes and eight manual journal entries had been quietly absorbed, with the rate of adjustments accelerating. No project management system existed to prove that work had been delivered. Procurement ran on informal supplier relationships, with thirty-five percent of spend uncontracted.

DVTA returned a NO_GO decision signal with 72% confidence. The buyer walked away from the $4M deal before signing.

The recommendation was not “negotiate harder.” The recommendation was that the business had no governable operations to acquire — only goodwill tied to one person. The seller was invited to reassess in six months after implementing basic systems.

Traditional due diligence asks whether the numbers are accurate. DVTA asks whether those numbers will hold up under a different owner. Verified revenue that disappears post-acquisition is a liability, not an asset.