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4 Reasons Deals Fall Apart

In many cases, the buyer and seller reach a tentative agreement on the sale of the business, only to have it fall apart. There are reasons this happens, and, once understood, many of the worst can be avoided

In a survey of business brokers across the USA and Canada, similar reasons were cited so often that a pattern of causality began to emerge.

The following are 4 situations and factors affecting the sale of a business.

  1. The Seller Fails To Reveal Problems
    When a seller is not upfront about problems of the business, this does not mean the problems will go away. They are bound to turn up later, usually sometime after a tentative agreement has been reached.
  2. The Buyer Has Second Thoughts About the Price 
    In some cases the buyer agrees on a price, only to discover that the business will not, in his or her opinion, support that price. The deal is in serious jeopardy when the seller wants more than the buyer feels the business is worth.
  3. Both the Buyer and the Seller Grow Impatient 
    During the course of the selling process, it’s easy – in the case of both parties – for impatience to set in. Buyers continue to want increasing volumes of information, and sellers grow weary of it all. Both sides need to understand that the closing process takes time. However, it shouldn’t take so much time that the deal is endangered. It is important that both parties, if they are using outside professionals, should use only those knowledgeable in the business closing process. Most are not.
  4. The Seller Doesn’t Really Want To Sell 
    In all too many instances the seller does not really want to sell the business. Selling a business has many emotional ramifications; a business often represents the seller’s life work. Therefore, it is key that prospective sellers make a firm decision to sell prior to going to market with the business. If there are doubts, these should be resolved prior going to the marketplace.

A Final Note 
Remember these components in working toward the success of the business sale:

  • Good chemistry between the parties involved.
  • A mutual understanding of the agreement.
  • A mutual understanding of the emotions of both buyer and seller.

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