The Most Important Deal We Never Closed: How Embarc’s First Major Client Defined Their M&A Philosophy

For many founders, building their business from the ground up can take decades, with many tying up the majority of their assets in its success or failure. Creating a company is a marathon; missing out on its full potential, however, can happen in seconds. All it takes is that last swipe of a pen during a sale; once you sign those final closing documents, there are no do-overs.

Embarc Advisors Managing Partner Jay Jung understood this high-stakes dynamic long before he founded his advisory firm. A former investment banker for Goldman Sachs and consultant for McKinsey & Company, Jung has explored every facet of the M&A process firsthand. It was during his time with these industry titans that he found his real passion: providing financial advisory for startups and the middle market.

Jung saw that the tactics used by large firms lacked an essential quality: the flexibility to prioritize the right outcome over a quick close. This philosophy, which became the guiding principle of his new firm, was immediately put to the test with Embarc’s first major client. When the initial deal approached the finish line, Jay and his team supported their client in making a decision that most firms wouldn’t: walking away. This moment, and the success that followed, became the foundation of Embarc’s unconventional and highly effective M&A strategy.

Embarc’s First Major Client

Embarc’s first major client wasn’t small, and after working for over 20 years and tying up over 90% of their net worth in the business, its founders felt they were ready for an exit. By the time Embarc was brought on, a deal had already been lined up with a private equity firm. Everything about the deal seemed straightforward on the surface: the sellers had a heavily involved fractional CFO [Link “Why Private Equity-Backed Companies Turn to Fractional Finance” when live], a full accounting team, and their books appeared clean. Unfortunately, Embarc took all of this at face value without conducting a seller’s quality of earnings (QofE) analysis. It was a naive move, one that Jung now calls a critical early lesson for the firm.

As is commonplace with private equity, the buyers compiled their own QofE report. They found the books, while not intentionally misleading, were not exit-ready. Common discrepancies that arise in owner-operated businesses began to come up. In what Jung described as a “death by a thousand cuts”, the buyer chipped away at the EBITDA. Embarc, concerned the PE firm would retrade on value, dedicated all their resources and expertise to keeping the deal from falling apart. They succeeded, and after completing a painful slog through diligence and document preparation, the time came to complete the sale. The deal was all but closed, but at the last minute, the founders had a change of heart.

What Embarc Did, and Why the Company Didn’t Sell

For a traditional M&A firm working on success fees, this outcome would have been a disaster. For Embarc, it was an opportunity.

Most advisory firms relentlessly focus on the how of a sale: how to get the most value for themselves, how to close the deal as quickly as possible, how to secure the biggest fee they can. But Jay took the chance to ask a question big firms rarely prioritize: “Why did you want to sell in the first place?”

The conversation that followed laid bare what the founders truly needed. Yes, they wanted the most money they could get, as would anyone who spent years building a business. But below that surface-level want were deeper, more personal objectives:

1. They wanted liquidity, but not necessarily a full exit. They had big families, big houses, lifestyles and loved ones they wanted to support without worry.
2. They wanted to create more value for a potentially greater exit later. Just like a PE firm, they saw that making strategic acquisitions was a clear path to do so.
3. They wanted to find the right home for their business. They realized they loved their work and wanted to continue, but only under the right conditions.

Addressing the Client’s Real Needs

With the founders’ true needs established, Embarc switched gears from sellside advisor to strategic partner. The new plan was designed to address each of their core goals one by one, shifting the focus from a simple transaction to a multi-step, strategic solution.

1. Solving for Liquidity: Although many founders think liquidity only comes from a full sale, Jung encouraged the company to instead raise debt. Taking a page from the private equity playbook, Embarc helped the company execute a founder-backed recapitalization. By raising a significant amount of debt, the founders were able to take a few chips off the table to secure their personal finances without selling a single share of equity.
2. Creating More Value: Next, Embarc shifted to buyside advisory, helping the founders act like their own private equity firm. After raising the necessary capital, Embarc executed a strategic acquisition for one of its key targets. The new business was then integrated, significantly boosting the company’s size and profitability.
3. Preparing for a Better Exit: Over the next 12 months, Embarc helped the company get its house in order, cleaning up its books and improving its financial reporting. Learning from the first failed deal, the advisory firm prepared a thorough seller’s QofE report; a practice that Jung says became standard operating procedure from that point forward. These vastly improved financial processes, combined with their successful acquisition, added an estimated $10 million in enterprise value to the business.

Results and Returning to Market

Armed with pristine financials, a compelling growth story, and a professional QofE report, the founders were ready to go back to market. Instead of a single prospective buyer, Embarc conducted a full outreach process and found multiple highly competitive bids. This would lead to the decision that defined the firm’s founder-first philosophy.

One buyer offered a significantly higher price. For the sellers, the number was tempting; it represented a tremendous payoff for decades of work and would yield the liquidity they needed many times over. If Embarc had operated on success fees, the deal would have also translated to a large payday, creating a powerful incentive to push for that deal. But after two years of working closely with the company, Jay said to turn it down.

Why Turn Down a Higher Offer?

His reasoning was simple: he had come to know the founders personally; he knew what they really needed, and it wasn’t a few extra dollars in the bank. They wanted to spend time with their families, take long vacations, and work with a company that shared their values.

This higher offer came from a buyer that would have demanded 60 hour work weeks and constant travel. Jay explained that, essentially, they would have hated their lives. The next bid, while lower, was still a premium valuation, representing a significantly higher EBITDA multiple and greater total payout than the original deal they had walked away from 18 months prior. And most importantly, it was with a buyer that was a far better cultural fit.

So they took his advice and went with the lower offer. 5 years later, they are still there, in that same office, enjoying their work. That outcome, for Embarc, is the definition of success.

How Embarc’s Strategy Differs from Big-Bank Advisors

The question Embarc gets most often is, “if you bill by the hour, what incentive do you have to ever sell the business?” Jung believes founders should be asking the exact opposite question of traditional advisors: If they only get paid on a successful sale, what incentive do they have to prioritize a client’s best interest over a quick close? This is the fundamental flaw in the standard M&A model, and why Embarc takes a different approach.

The Traditional M&A Model

• Incentive: Numerous firms use a success fee model, meaning the advisor only gets paid when a deal closes. The payout is entirely backloaded, creating an inherent conflict of interest.
• Focus: These firms typically focus on speed and volume. An advisor’s time is spread thin across many deals, hoping a few will close quickly. These firms can’t afford to spend 12 or 18 months helping a client prepare for a sale.
• Capabilities: Many middle-market banks are limited to sellside transactions, which means their only path to payment is to push for a sale, even if a strategic acquisition would benefit the client more.

The Embarc Model

• Incentive: Because they use an hourly model, Embarc can create a strategy that aligns with the client’s best interests. This structure also allows them to provide objective advice, regardless of whether the company sells.
• Focus: Embarc is dedicated to achieving the client’s true long-term goals, taking the time to find the right solution, not just the fastest one.
• Capabilities: Embarc’s team, which includes former private equity professionals, has deep expertise across sellside, buyside, and capital raises. This allows them to pivot with a client when a sale isn’t the right answer.

Don’t Just Sell Your Business, Prepare It

Jay says his approach is best explained with the “Home Sale” analogy. If you were selling your home, you wouldn’t just throw a ‘For Sale’ sign on the lawn. You’d repaint, fix what’s broken, and stage it to highlight its best features. A business, which is infinitely more complex, deserves at least the same level of preparation. The unfortunate reality is that most M&A advisors aren’t equipped to handle that process.

Embarc was built specifically to provide that deep, hands-on preparation. The firm believes its team members are problem-solvers first and finance experts second. By solving these problems, they can do for every client what they did for their first: structure a deal that serves a founder’s life, not just their balance sheet.