The $4 Million Mistake No One Saw Coming
A client once called us after investing $4 million into what they believed was a fast-growing food distribution company.
It checked all the boxes on paper:
Strong year-over-year revenue growth
A charismatic CEO with industry experience
Promises of nationwide expansion
But less than a year in, operations unraveled. Deliveries were missed. Vendors stopped responding. Cash flow dried up.
When we were brought in to do the post-mortem, here’s what we found:
Growth was revenue booked, not collected—with massive uncollectible receivables.
Vendor relationships were fragile—built on personal favors and not contractual agreements.
Leadership had no succession plan—and the founder had been planning to leave for months.
The investor lost nearly $2 million before exiting. All of this was avoidable.
What was missing?
Proper due diligence—not just of the numbers, but of how the business actually functioned.
