Founders should be wary of earn-out clauses. Acquirers can impose layers of pointless processes and overhead costs, tanking the profitability of a successful business and making it impossible for the founder to ever receive their earn-out payment.

When considering debt against a signed contract, operate under the assumption that the contract will not come through. This prevents piling financial risk on top of an already risky situation. Only proceed if your business can sustain the debt repayment without that expected revenue, as a signed contract is not guaranteed cash.

At 18, Alex Marechniak acquired his first business with minimal capital by negotiating an "earn out" with the sellers. This seller-financing structure allowed him to pay for the business using a percentage of its future revenue, proving lack of capital isn't a barrier to ownership.

In M&A, the closer you get to closing, the more emotionally invested you become, even mentally spending the money. This attachment makes founders vulnerable to accepting last-minute unfavorable changes because they've already "emotionally bought in" and moved on from owning the company.

Investors can be non-committal. To cut through ambiguity, founders must create a forcing function by directly asking for the term sheet. If the investor stalls or deflects, it's a negative signal, and the founder should move on.

In its rush to acquire fintech Frank, JPMorgan signed an agreement obligating it to pay the founder's legal fees—even for litigation related to her own fraud against JPM. This expensive oversight highlights how even sophisticated players can miss critical terms in fast-moving markets, with disastrous financial consequences.

Unlike convertible notes, the SAFE (Simple Agreement for Future Equity) often lacks an expiration date or protective provisions. This loophole is reportedly being abused by some founders who take investment, fail to build, and then argue that SAFE holders aren't technically investors and are owed nothing.

When considering debt, the most critical due diligence is not on deal terms but on the lender's character. Investigate how they have treated portfolio companies during challenging times. Partnering with a lender who will "blow you up" at the first sign of trouble is a catastrophic risk.

Aspiring business owners can overcome capital constraints by negotiating seller-financed deals. The original owner effectively loans the buyer the purchase price, often in exchange for a share of future profits, making acquisitions more accessible to individuals.