Nick Katz Explained the #1 M&A Mistake Founders Make

Kyle Winder
25 minutes ago
3 min read

In this Episode, Nick Katz brings his experience in building, scaling, and selling companies to new ventures and opportunities.

About This Episode

Acasa helps people run a shared home without the usual friction. It started as a simple way for housemates to track and split rent, bills, and groceries, then added payments and utility setup so households could manage recurring bills in one place.

When Nick Katz tried to sell acasa on his own, the downside wasn’t just a slow process. It created a setup where buyers had the leverage: they could keep asking for information, keep “exploring,” and never commit to an LOI.

With no deadlines and no competitive pressure, there was no reason to act. In this episode, you discover how to:

Spot when a buyer is gathering intel, not buying
Structure stage gates that force a yes, a no, or a clear next step
Control disclosure so access to information is earned
Build competitive tension without bluffing
Shift the pitch from vision to “cheaper to buy than build”
Keep emotion out of the process by using an objective quarterback
Prevent endless diligence from becoming the default outcome

About Our Guest

Nick Katz

Nick Katz is an entrepreneur and the founder of Acasa, a company he successfully built and sold. Known for his strategic mindset and execution-focused leadership, Nick specializes in turning ideas into scalable businesses and navigating growth through to exit.

Today, he brings his experience in building, scaling, and selling companies to new ventures and opportunities.

Definitions of Terms

Due-Diligence: This is a comprehensive appraisal of a business or investment undertaken before a merger, acquisition, or investment. It seeks to validate the information provided and uncover any potential risks or liabilities.

Earn-out: This is a financing arrangement for the purchase of a business, where the seller must meet certain performance goals before receiving the full purchase price. It reduces the buyer’s risk and aligns the interests of both parties post-acquisition.

Roll Over Investor: A rollover investor, in the context of selling a business, refers to an individual or entity that rolls some of their proceeds from the sale with the buyer. This strategy allows the seller to defer capital gains taxes and potentially leverage their expertise or resources in a new venture.

Debt Coverage Ratio: The debt coverage ratio is like a financial health check for a small business applying for a loan from a bank. It shows whether the business earns enough money to comfortably cover its debt payments.

In simpler terms, it’s a way for the bank to see if the business can afford to pay back the loan. If the ratio is high, it means the business is making enough profit to easily handle its debts.

But if it’s low, it could indicate that the business might struggle to make loan payments, which could make the bank hesitant to lend them money.

Let’s say there’s a small bakery called “Sweet Delights” that wants to expand its operations by taking out a loan from a bank to buy new equipment.

The bank wants to make sure Sweet Delights can afford to repay the loan, so they calculate the debt coverage ratio.

Sweet Delights’ annual net income (profit) is $50,000, and they have annual loan payments of $20,000 for existing debts.

The debt coverage ratio formula is:

Debt Coverage Ratio = Net Operating Income / Total Debt Service

In this case: Net Operating Income = $50,000 (annual profit) Total Debt Service = $20,000 (annual loan payments)

So, the debt coverage ratio would be:

Debt Coverage Ratio = $50,000 / $20,000 = 2.5

This means that for every dollar of debt Sweet Delights has, they’re making $2.50 in profit. In simple terms, the higher the ratio, the better, because it shows that Sweet Delights is making enough money to comfortably cover its debt payments.

This would likely make the bank more confident in lending them the money for the new equipment.

The Transfer of your Business may be the

Biggest Financial Transaction of your Life.

At Flight Plan Strategies, we utilize ExitMap® to help Business Owners understand their current level of preparedness so that they can begin the succession planning process.