There are all sorts of reasons why a deal might fall apart. It can be helpful to understand what they are in order to avoid them in the future. In this post, we’ll take a look at four major categories of reasons a sale might fall through, and what you can do to mitigate the risk of them happening to you.
Sellers who really don’t have a strong reason for selling. Without a commitment, it’s very difficult to hold together the deal. Some are just testing the waters; others are holding out for prices that can’t be supported by the numbers. Those sellers who didn’t check with their tax advisors or other outside professionals may be in for surprises that force them to withdraw from a sale. An unusual but common reason is panic about what the seller will do once the business is sold.
While some are due to unknown problems that surface during the due diligence process, others happen because the buyer realizes they aren’t cut out for the job or can’t make the leap of faith necessary to buy their own business. No matter what the reason may be, you should understand why these deals fall through so you can be better prepared in the future.
Unneeded advice is usually the cause of this issue. The next biggest cause is outside advisors giving overly aggressive advice to buyers and/or sellers. Many outside advisors forget that they should be putting the deal together instead of trying to get one side or the other more money or property.
Acts of Fate
Acts of Fate are another reason. This includes everything else! The seller may not be able to substantiate, at least to the buyer’s satisfaction, the earnings of the business. Problems may arise, unknown to either party, from federal, state, or local government agencies.
There are many reasons why deals may not come to fruition. The majority of these can be resolved with a business broker. A professional business broker will know all of the ways that a deal could go wrong and how to fix them before they happen. Working with Gulf Coast Business Brokers can save you time, money, and a lot of headaches.