Latest / The Acquisition Talk with Fexingo: Mergers, Buyouts, and Business Sales for Operators
How the J-Curve Trap Sinks M&A Returns
Lucas and Luna unpack a classic private-equity pitfall: the J-curve trap. Using the 2019 acquisition of a mid-market industrial coatings company as a case study, they explain how buyers overpay for turnarounds by underestimating the capital required to restructure operations. The hosts walk through how one deal — backed by a respected middle-market sponsor — collapsed when working capital needs ballooned 40 percent above projections. They contrast disciplined earnout structures that protect buyers with vague 'transformation budgets' that hide risk. The episode also covers how…
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