Why Don’t Some Businesses Sell?
Why Don’t Some Businesses Sell?
A practical perspective from an iGaming M&A adviser
Over a decade spent advising on €3 – €500 million transactions in sports-betting, casino, esports and fintech has taught me a blunt lesson: every failed sale looks different on the surface yet almost all collapse for the same handful of reasons. Below I re-cast more than two dozen real-world case studies—drawn from gaming, wider TMT and traditional bricks-and-mortar deals—into a structured narrative that shows where, when and why transactions go off the rails, and what an owner can do about it.
1 | Where Transactions Falter
The life-cycle of a sale can be broken into four stress-points:
Market engagement – weak positioning, a thin buyer universe or simply launching at the wrong time of the year stall many mandates before serious NDAs are signed.
First-look disillusion – once teasers give way to data-room downloads, enthusiasm can fade quickly if growth, margin profile or working-capital mechanics diverge from the pitch.
Due-diligence surprises – from unlicensed skins in Curacao to missing AML procedures, the deeper lawyers dig the more fragile “headline value” becomes. Regulatory failings in e-gaming are particularly lethal: recent Ontario cases show how AML lapses can lead to fines that wipe out EBITDA multiples.
Pre-closing shocks – landlord rent hikes, franchisor rule changes or a sudden revenue dip trigger price chips or walk-aways. The 2024 Skywind v In Touch Games litigation is a textbook example: undisclosed compliance breaches were still surfacing ten months after signing and are now before the High Court.
2 | Eight Illustrative Situations
Remote-location handicap – A rural Indiana route-betting operator generated healthy cash but could not attract a professional GM willing to relocate; strategic buyers passed because the licence was non-transferable.
Licence-restricted niche – A Caribbean sports-book needed a rare “Cat 1” licence in its home island; only three potential acquirers held a reciprocal permit, crippling auction tension.
Easily cloned service – A Malta-based CRM outsourcer claimed “unique processes” yet owned no IP, making the €6 m asking price look like a premium for a sales roster that could resign tomorrow.
Perceived existential risk – A grey-market slot studio lost two Asian e-wallet integrations during exclusivity. Venture-backed challengers with deeper marketing budgets convinced bidders the studio’s position was untenable.
Growth-valuation gap – A poker‐traffic affiliate compounding 30 % p.a. demanded a forward multiple; buyers, anchored on LTM EBITDA, refused to pay for projections they could not verify.
Sector aversion – Emergency plumbing franchises, cybersecurity incident-response firms and—in gaming—the player-protection hotline segment all suffer from “unloved industry” stigma that dampens multiples irrespective of underlying KPIs.
Micro-scale hurdle – A Gibraltar game-jam studio had elegant IP but <€500 k revenue. Without VC backing to fund UA campaigns, buyers suspected product-market fit problems and moved on.
Customer concentration cliff – A B2B odds-feed supplier deriving 82 % of turnover from one tier-one sportsbook failed to reassure buyers despite a three-year rolling contract; the option to terminate for regulatory breach was a deal-killer.
3 | Frequent Deal Stoppers and Practical Fixes
| Pain-Point | Typical Value Erosion | Mitigation Playbook |
|---|---|---|
| Regulatory non-compliance (AML, licence gaps) | 15 – 100 % of headline price wiped out, deals abandoned | Commission a pre-sale Red-Flag Regulatory Audit; remediate before going to market. |
| Owner-centric relationships | 1-3× EBITDA discount | Sign key-man contracts, introduce next-gen management nine months pre-process. |
| Unverified growth forecasts | Valuation differences of 20 – 40 % | Prepare bottom-up cohort and funnel analytics; offer an earn-out that shares upside. |
| High customer concentration | Bank debt unavailable; private equity withdraws | Negotiate longer-tenor contracts or diversify by JV prior to launch. |
| Poor quality financials | Buyers re-price or pull out | Convert to audited IFRS/US-GAAP statements, reconcile to tax filings for three years. |
4 | Preparation: Turning Risk into Leverage
Start 12-24 months out. Commission a sell-side quality-of-earnings review, map every jurisdiction where you take deposits or run servers, and stress-test future regulation—particularly affordability checks and marketing restrictions that are tightening across Europe and North America. Strategic buyers in 2025 pay premium multiples for compliance-ready platforms because they have learned, from cases like the FINTRAC crackdown in Canada, how expensive retro-fits can be.
On the operational side, decouple the founder from daily decision-making, institutionalise VIP schemes, and lock in data rights on any white-label or third-party skins. If real estate is material, renegotiate leases before LOIs are signed to neutralise rent-gouging. Finally, benchmark valuation expectations realistically—gaming M&A multiples moderated to 8.1× median EBITDA in 2024, and private-equity interest is high but disciplined.
5 | Pros and Cons of Selling Now
Pros
- Access to record dry-powder from PE and strategic operators seeking regulated expansion.
- De-risk personal wealth ahead of potentially stricter advertising and AML regimes.
- Ability to leverage buyer balance sheets to scale product and geographic reach.
Cons
Valuations face downward pressure from slower post-pandemic growth and higher cost of capital.
Earn-out structures tie a portion of consideration to future performance and may limit day-to-day freedom.
Heightened regulatory scrutiny means longer, costlier due-diligence cycles.
6 | Frequently Asked Questions
Q: How long does an iGaming exit typically take in 2025?
A well-prepared mid-market process runs 6-9 months from hiring advisers to closing. Add three extra months if multiple licences or platform migrations are required.
Q: Will pending EU AML Package 6 affect my valuation?
Yes. Buyers will haircut cash-flows if they must retrofit transaction-monitoring or enhanced CDD. Having a compliant framework in place pre-sale preserves multiples.
Q: Can earn-outs bridge a valuation gap caused by aggressive growth forecasts?
Absolutely. Roughly 40 % of gaming deals in 2024 featured earn-outs, typically 15-30 % of headline price payable over two years against EBITDA or NGR targets.
Q: What is the minimum financial disclosure I need?
Three years of audited statements, current-year management accounts to the most recent month-end, detailed player-cohort data, licence summaries, and evidence of responsible-gaming controls.
Q: How do I protect confidentiality with employees?
Use a tiered information release: teaser → redacted IM → VDR; involve key staff only when exclusivity is granted, and align their incentives with retention or deal bonuses.
Closing Thought
Selling an iGaming business is perfectly achievable—even in a market shaped by stricter AML rules and cautious capital—but only for owners who treat preparation as seriously as product development. By addressing the deal stoppers in advance, you convert what looks like “hair” on the transaction into competitive advantage, shorten diligence, and defend price. The alternative is to become yet another case study in why some businesses never sell.
