When to Walk Away: Trusting Your Gut on Deals, Projects and Buyers

Walk away from a deal when your gut says no and the evidence backs it up: the numbers rely on hope, the other side's behaviour worries you, or it pulls you away from your plan. Don't ignore instinct and don't obey it blindly. Name the doubt, test it against facts, then decide.

"I got us involved in a project a few years ago, which I knew was the wrong thing to do."

That's Ian Girling, CEO of the Dorset Chamber, talking to me on Dorset Business Matters. Not a first-time founder. Someone who leads one of Dorset's most influential business organisations.

"One of the things I've learned is to trust my instinct. Within three weeks of engaging on this new programme, I knew it was the wrong thing to do. And I had to back out, and it was a little bit embarrassing… Why did we do that? 'Cause it looked commercially really good. And it looked like it was really gonna help."

It looked commercially really good.

That's the trap. The deals that hurt most rarely look bad on paper. They look great. Something else is nagging at you, and you talk yourself out of listening.

Why do good business owners ignore their gut?

Because the spreadsheet is easier to defend than a feeling.

You can show a board, a partner or your bank a set of projections. You can't show them "something felt off". So the numbers win, even when part of you knows better.

There are other reasons too:

• Sunk cost. You've spent weeks on it. Walking away feels like wasting that time.
• Fear of missing out. What if it's the one?
• Ego. You said yes publicly. Backing out means admitting you were wrong.
• Borrowed authority. Someone you admire did it this way, so it must be right.

That last one comes from Michelle Reade, a coach who spent years in franchising. She says too many owners follow other people's playbooks instead of their own judgement:

"There's so many frameworks out there. And yes, I believe that we all need them, of sorts. But do what feels right in your gut. And continue to be you."

Is gut feel a good basis for business decisions?

On its own, no. Tested, yes.

Gut feel is pattern recognition. After years in business, your brain spots things before you can explain them: a tone in an email, a number that doesn't quite fit, someone who's a bit too keen to close. That's valuable data.

But instinct can also be fear, tiredness or a bad week dressed up as wisdom. And sometimes instinct gets lucky.

When I asked Millie and Tim Gough of Vagabond Pilates whether they had a plan when they opened their second studio, the answer was honest:

"It was a little bit of almost impulse, which I wouldn't recommend as a business decision… No plan, no plan. All instinct, really."

It's worked out for them. But they'd be the first to tell you not to copy that part. (Episode here.)

So the answer isn't "always trust your gut". It's "always listen to your gut, then check it". As Andy Strong said when I asked what a new founder should do first: have a plan, even though it will change. I covered that in what to do before starting a business. The plan is what you test your instinct against.

Gut or numbers: which should win?

Neither, on its own.

I've said before that business owners who understand their numbers make better decisions, and those who don't often end up relying on gut feel and hope. I still believe that. Hope isn't a strategy.

But the reverse is also true. Numbers can be made to say almost anything, especially when someone wants you to sign. A forecast is only an opinion with a spreadsheet attached.

The best decisions I see come from owners who use both. The numbers tell you whether a deal can work. Your gut often tells you whether it will, with these people, at this time, for this business.

When they disagree, don't pick a side. Find out why.

How do you test a gut feeling before you walk away?

Here's the simple process I use with clients. It takes an hour, not a month.

1. Write the doubt down. One sentence. "I don't trust their numbers." "This will take me away from the core business." "I don't like how they treat their staff." Vague unease becomes something you can check.

2. Ask: what would I need to see to feel differently? Audited accounts? A reference? A smaller first project? A clause in the contract?

3. Go and get that evidence. Ask the awkward question. Request the document. Call the reference.

4. Check it against your plan. Does this move you towards your three-year goals, or is it a detour that happens to pay?

5. Set a walk-away point in advance. Price, terms, timeline, behaviour. Decide it before you're emotionally invested, not during the negotiation.

6. Sleep on it once. Not for a week. Once.

If the evidence settles the doubt, go ahead with confidence. If it confirms the doubt, or they won't give you the evidence, you have your answer.

Signs it's time to walk away from a business deal

• The numbers only work if everything goes right: There's no margin for reality.
• They won't share information you'd reasonably expect: Something is being hidden, or they're disorganised. Neither is good.
• The pressure to sign is coming from them, fast: Urgency is their tactic, not your opportunity.
• It pulls you away from your core business: It's a distraction with a revenue line attached.
• Your best people are uneasy: They see things you don't. Ask them why.
• You're justifying it to yourself out loud: You already know.
• You'd be embarrassed if the full terms were public: Don't do it.

Two or more of these, plus a nagging feeling? Stop and test before you go any further.

When should you walk away from a buyer for your business?

This is where it really matters, because selling a business is usually a once-in-a-lifetime decision.

The wrong buyer can cost you far more than the wrong project. They might chip the price at the last minute, drag out due diligence for months, or treat your team badly after completion. And the business you spent decades building has their name on it.

Walk away from a buyer when:

• They keep re-trading. The price agreed in principle keeps falling as completion gets closer, without a good reason.
• The deal structure shifts the risk to you. Most of the money is deferred, conditional on targets you won't control after you leave.
• They don't respect your people. How a buyer talks about your team before the deal is how they'll treat them after it.
• They can't show they can fund it. Proof of funds is a fair request.
• Your gut says no and your adviser agrees. That's two signals, not one.

The strongest position in any negotiation is being genuinely willing to walk away. You only get that position if you're not desperate: your business can run without you, you have more than one interested buyer, and you've prepared properly. If you're not there yet, read seven signs your business isn't exit-ready and when to sell your business.

That's also part of why I co-founded FairExchange with Ross Bugden FCCA. Owners list their business and speak to serious buyers directly, so they decide who they talk to. It's free to join; listings are paid, with no seller success fee. More on the sell your business page.

What if you've already said yes?

Then do what Ian did. Back out as early as you responsibly can.

It was "a little bit embarrassing", he said. It was also the right call. The longer you stay in something you know is wrong, the more it costs: money, time, reputation and your team's confidence in you.

Mistakes are how we learn. So next time, you'll trust your gut.

And next time, you'll test it first.

Facing a decision that doesn't feel right?

Sometimes you just need someone outside the business to ask the awkward questions. That's a big part of what I do, especially for owners heading towards an exit. See my business exit strategy work, or book a free Discovery Call at simonellson.com/contact. You can also call me on 01305 566150.

Hear Ian's full story, including delivering coal up Gold Hill in Shaftesbury, on Dorset Business Matters.

FAQs

When should you walk away from a business deal?

Walk away when the numbers only work if everything goes right, the other side won't share reasonable information, you're being rushed, or the deal pulls you away from your plan. If your gut agrees with the evidence, that's your answer.

Should you trust your gut in business?

Listen to it, then test it. Gut feel is pattern recognition built from experience, but it can also be fear or tiredness. Write the doubt down, decide what evidence would change your mind, then go and get it.

How do you back out of a business deal professionally?

Do it early, in writing, and honestly. Explain that it isn't the right fit, honour anything you've already committed to, and don't burn the relationship. A short, embarrassing exit is far cheaper than a long, expensive one.

What are red flags when selling a business to a buyer?

Repeated attempts to lower an agreed price, deal structures that push most of the payment into the future, slow or vague proof of funds, and disrespect for your team. Any of these deserves a serious conversation with your adviser.

How do you get the confidence to walk away from a buyer?

Prepare well before you sell. A business that runs without you, has clean numbers and attracts more than one buyer gives you options. Options are what let you walk away from the wrong deal.

Is walking away from a deal a failure?

No. Ian Girling, CEO of Dorset Chamber, backed out of a project within three weeks because he knew it was wrong. Walking away early from a bad deal is good judgement, not failure.