In probably 90+ percent of the searches that we have conducted, the prior art does not "knock out" the client's invention. However, in probably the same number of cases, the prior art reveals that the client cannot get a patent with the scope that he or she initially envisioned. Instead, the search reveals that certain, narrower aspects of the client's invention may be patentable.
Let's say you synthesize what you believe is a new polymer and learn that within a certain range of molecular weights, it functions well as a skin adhesive. You think the polymer has never been synthesized before and does not exist in nature. A search reveals that it has been synthesized before, but nothing indicates that it has been synthesized in the molecular weight range that you discover provides good skin adhesive properties. You cannot get claims that broadly cover the polymer. However, now you can tailor your claims and application to the molecular weight range and/or to the use of the polymer as a skin adhesive. Thus, you avoid claiming the polymer too broadly and the ensuing expense of responding to prior art rejections that you might have avoided with more narrowly tailored claims.
Alternatively, you may discover that the features that are patentable are easily avoided in a commercial product ("designed around") without compromising the product's value. In that case, although you could get a patent in theory, the search results indicate that it would not be economically prudent to pursue one.
You Plan on Seeking Foreign Patents
Once a patent application has been filed, if the examiner finds close prior art, you will generally need to narrow your claims to distinguish it. If you want to limit the independent claims to something that is already in the dependent claims, it is usually not a problem. However, if you want to incorporate unclaimed subject matter from the specification, it can be quite problematic. While it is usually not a problem in the US, in foreign countries--and especially in Europe--it can be quite problematic because the Examiners will typically not allow you to simply extract individual features from your specification to narrow the claims. Instead, if you want to limit your claims to features of an embodiment, you have to limit them to everything in the embodiment that the examiner deems essential. Sometimes, this effectively puts you in the position of either not getting a patent or getting one that is worth very little (because it is easily designed around).
This means that in Europe and in some other foreign jurisdictions, it is much more important (or beneficial) to know what is patentable when you file the application and to make sure your claims are drafted accordingly. You can readily amend a claim by incorporating features of a dependent claim, but amending the claims based on the specification is very difficult. In addition, Europe charges very high "excess claim fees" for each claim over 15 total. So, you need to use the allotted claims wisely to keep costs down. Thus, if you are planning on patenting abroad, it is even more important to consider doing a patentability search.