Why I walk away from deals that technically work

[Patrick McKeown]

One thing I’ve learned over time is that just because a deal works on paper doesn’t mean it’s worth doing. Early on, I put a lot of weight on spreadsheets and returns, but experience has shifted my focus more toward execution risk than projected upside.

The deals I’m most comfortable walking away from usually don’t fail because of numbers alone. They tend to rely on optimistic assumptions, thin margins with no room for error, or operational complexity that only makes sense if everything goes exactly as planned. When a deal requires constant justification or depends on best-case scenarios, it’s usually a sign that the risk isn’t properly priced in.

As I’ve gotten more disciplined, I’ve noticed that having a clear threshold for execution risk matters just as much as return targets. Deals that fit my operating style, capital structure, and tolerance for uncertainty tend to perform better over time, even if the projected returns look more conservative.

At this point, passing on a deal that technically works feels like risk management, not missed opportunity. I’m curious how others think about it — what usually causes you to walk away from a deal that still pencils on paper?