Add-backs and financial red flags

What really kills business deals—without anyone noticing?

Not the obvious red flags.
Not the spreadsheets.
But the quiet mistakes buyers make the moment they think they’ve already won.

In this episode, Jaryd Krause sits down with John Martinka (aka The Escape Artist), who’s spent 25+ years advising buyers and sellers across 150+ real acquisitions. No theory. Just what actually happens in deals.

You’ll hear why first-time buyers fall in love too fast, how stopping your search early weakens your position, and why relationships matter more than price once negotiations get serious. John also reveals how “great on paper” deals quietly turn into long-term stress, and what to do instead.

Plus, what happens after the deal closes: how one small shift helped a buyer grow a business by 75% in under a year, and why growth often fixes problems faster than perfection ever will.

If you’re buying a business (or even thinking about it), this episode will change how you see deals before it’s too late.

👉 Watch the full video now and get tips most buyers only learn the hard way.

Episode Highlights

02:45 – Buyer fever explained: why first-time buyers knowingly overpay—and how emotional attachment kills financing and post-close cash flow.

04:10 – Why stopping your search early weakens leverage, increases emotional risk, and makes buyers over-commit before a deal is real.

05:58 – A real $6M deal case study: how choosing the highest offer over the right buyer led to 12+ months of post-close disputes and massive stress costs.

10:05 – Why most deals do close after LOI—and the specific conditions that still quietly cause failures during diligence.

11:20 – Add-backs red flags: why too many adjustments signal risk, credibility issues, and potential tax exposure.

18:10 – Seller priorities revealed: why 90%+ of sellers care more about employee outcomes and legacy than price alone.

21:40 – Earn-outs unpacked: why earn-outs fail when used to justify overpricing—and when they actually make sense.

28:30 – How one compensation change drove 75% revenue growth in under 12 months after acquisition.

Key Takeaways

➥ Don’t fall in love with a business before due diligence. Emotional attachment (“buyer fever”) can lead to overpaying and unrealistic expectations.

➥ Keep your options open. Continuing your search until closing strengthens negotiating power and reduces risk.

➥ Choose the right buyer or seller over the highest price. Alignment of values, motivation, and vision prevents long-term disputes and stress.

➥ Customer concentration risk: Businesses with 2 customers generating ~60% of revenue are extremely vulnerable—loss of one client can collapse cash flow and valuation.

➥ Owner dependency is a hidden risk: Owners working 30–40+ hours per week without robust systems increase acquisition risk; businesses are more valuable when the owner can step away without disruption.

➥ Employee incentives drive growth. Strategic compensation and bonuses can unlock rapid revenue growth without heavy structural changes.

➥ Seller priorities often extend beyond money: Over 90% of sellers care about employee outcomes and business legacy as much—or more—than the final sale price.

About John Martinka

John Martinka, known as The Escape Artist®, is a veteran M&A advisor and business strategist. As Co-Founder and Managing Member of Nokomis Advisory Services and Martinka Consulting, he’s guided over 150 business buy-sell transactions and analyzed more than 1,000 companies. 

With more than 25 years of experience, John helps executives “escape” the corporate grind by buying businesses the right way, and he also coaches business owners to exit their companies with style, grace, and maximum value. He’s a prolific author (four business books) and speaker, passionate about reducing owner dependency, building systems, and setting up companies to scale or exit profitably.

Connect with John Martinka

➥ https://www.linkedin.com/in/johnmartinka/ 

Resource Links

➥ Connect with Jaryd here - https://www.linkedin.com/in/jarydkrause

➥ Buying Online Businesses Website - https://buyingonlinebusinesses.com

➥ Download the Due Diligence Framework - https://buyingonlinebusinesses.com/freeresources/

➥ Sell your business to us here - https://buyingonlinebusinesses.com/sell-your-business/

➥ Google Ads Service - https://buyingonlinebusinesses.com/ads-services/

Buy & Sell Online Businesses Here (Top Website Brokers We Use) 🔥

➥ Empire Flippers - https://bit.ly/3RtyMkE

➥ Flippa - https://bit.ly/3wGa8r5

➥ Motion Invest - https://bit.ly/3YmJAmO

➥ Investors Club - https://bit.ly/3ZpgioR

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