Every founder worries about valuation.
The best founders worry about surprises.
In the latest episode of This Is M&A, Steven Monterroso sits down with Gregg Blake, Managing Director of Healthcare Investment Banking at CapM Advisors, to discuss what really separates successful life science and medtech exits from the deals that quietly fall apart. After advising healthcare companies for more than 20 years and working on transactions as large as $51 billion, Gregg has seen one truth repeated over and over:
Deals rarely die because of the problem itself. They die because the buyer discovers the problem too late.
For founders preparing for an acquisition, that lesson could be worth millions.
Build the Business, and the Exit Takes Care of Itself
Many entrepreneurs don’t begin thinking about an exit until they hire an investment banker.
Gregg believes that’s far too late.
The companies that achieve premium valuations begin preparing two to three years before they ever go to market. Their focus isn’t simply on growing revenue. It’s on building a healthier, lower-risk business.
That means:
- Reducing operational risk
- Improving profitability
- Creating sustainable growth
- Building a management team that can operate without constant founder involvement
A strong business naturally attracts buyers.
A well-prepared business attracts better buyers willing to pay more.
The Problem with Moving Goalposts
One of the most overlooked obstacles to a successful exit has nothing to do with customers or products.
It’s capital structure.
Every time a company raises another round of funding, new investor expectations enter the equation. Each investor expects a meaningful return, increasing the valuation required for everyone to achieve their objectives.
Gregg describes this as moving the goalposts.
Companies that continually raise more capital than they truly need often create unnecessary complexity that makes exits harder to execute later.
Growth capital is important.
But disciplined capital planning is equally important if an acquisition is part of the long-term strategy.
Get on the Chessboard Early
Relationships matter long before a formal sale process begins.
Gregg encourages founders to build relationships with strategic buyers years before they intend to sell.
Why?
Because buyers are constantly evaluating companies in their markets.
The organizations already on their radar often receive more attention when the time comes to pursue acquisitions.
Waiting until the sale process begins means starting those conversations far later than your competitors.
Successful exits often begin long before anyone signs a confidentiality agreement.
Bad Surprises Kill Deals
The central message of the episode is remarkably straightforward.
Problems rarely kill transactions.
Surprises do.
Every business has weaknesses.
Buyers understand that.
What destroys confidence is discovering unexpected issues during diligence that could have been disclosed earlier.
Customer concentration.
Key person dependence.
Regulatory concerns.
Financial inconsistencies.
Operational challenges.
When sellers proactively disclose risks, they control the conversation. They provide context, explain mitigation strategies, and demonstrate credibility.
When buyers discover those same issues independently, they begin questioning everything else they haven’t yet uncovered.
Trust erodes quickly.
And so does deal momentum.
Control the Information Flow or the Buyer Will
One of Gregg’s strongest recommendations is for sellers to complete their own Quality of Earnings (QofE) analysis before launching a process.
Why?
Because whoever produces the first credible analysis often controls the narrative.
If the seller identifies issues first, there is time to explain them, resolve them where possible, and present accurate context.
If the buyer uncovers those issues during diligence, the conversation immediately shifts from value creation to risk reduction.
The leverage changes.
Running vendor-side diligence allows founders to enter negotiations from a position of strength rather than reacting defensively after concerns are raised.
Preparation becomes negotiating power.
What a Real Auction Process Looks Like
Many founders assume premium valuations happen because the perfect buyer appears at exactly the right time.
Gregg explains that successful investment bankers rarely rely on luck.
They create competitive tension.
Well-managed sell-side processes involve carefully timed information releases, structured deadlines, multiple interested buyers, and disciplined communication throughout negotiations.
One story from the episode illustrates just how valuable that process can be.
Over the course of approximately 36 hours, competitive tension between buyers increased the transaction value by 25 percent.
That wasn’t coincidence.
It was process.
Sophisticated deal execution often creates just as much value as the business itself.
Scientific Risk and Commercial Risk Aren’t the Same
For life science and medtech companies, not all risk carries equal weight.
Gregg distinguishes between scientific risk and commercial risk.
Earlier-stage companies are primarily evaluated on clinical data, scientific validation, and intellectual property.
Commercial-stage businesses face different scrutiny.
Revenue quality.
Competitive positioning.
Operational execution.
Understanding which risks buyers prioritize at each stage helps founders prepare more effectively and communicate their strengths more clearly during diligence.
Great Deals Are Built Long Before They Close
Perhaps the biggest takeaway from the conversation is that successful exits are rarely created during the sale process.
They’re built years beforehand.
Companies that reduce risk, organize their financials, strengthen management, prepare diligence materials, and communicate transparently create confidence long before negotiations begin.
And confidence creates value.
The smoother the diligence process becomes, the easier it is for buyers to focus on opportunity rather than uncertainty.
About Gregg
Gregg Blake has spent more than two decades advising life science and medtech companies through acquisitions, strategic growth, and cross-border transactions. His practical advice offers founders a roadmap for building stronger companies, managing diligence effectively, and maximizing value when it’s time to sell.
Whether you’re preparing for an exit in two years or simply building a healthier business today, this episode delivers lessons every founder should hear.
Watch the latest episode of This Is M&A to learn why the biggest deal killer isn’t the problem itself, it’s the surprise.
