Business Brokerage .
Steve Skrlac, MBA, CFA
sales representative
.
Why Business Deals Sometimes Fall Apart
The sale of a business can be a winding road cluttered with roadblocks to overcome. As a business owner looking to sell a business or an investor looking to buy one, it is important to be realistic and realize that sometimes businesses don’t sell to a particular purchases, even after a conditional agreement is signed.
This article will examine some reasons why some business deals simply fall apart.
Advisors Sometime advisors also simply overstep their role in the transaction and cause a deal to fail due to unsubstantiated opinions. For instance, a lawyer saying that a business was sold at ‘too high a price’ does no justice to his or her client (and this has been experienced). Seller’s Not Truly Ready to Sell a Business The following is a list of some of the ways that a seller can cause a deal to fall apart: Business Buyers The following is a list of some common reasons why deals fall apart due to the buyers: The process to buy or sell a small business can be long and arduous. Taking the guess-work out from the beginning will save all parties involved much time and headaches overall.
Sometimes professional advisors correctly point out deficiencies in a business sale agreement that have been overlooked by the buyer or seller and this, rightly, causes the original conditional agreement to be challenged.
A competent business broker will typically qualify his or her seller clients at the time of listing to ensure that they are truly prepared to sell their company. The business broker will go over the process of how to sell a business, the steps along the way and get the owners ready for the task at hand. However, sometimes people can simply change their minds.
- Seller’s remorse. The business owner is not emotionally ready to sell their business.
- Seller is hiding a problem or deficiency of the business that is later uncovered during the due diligence process.
- Sellers not working with their professional advisors before listing the business for sale.
- A seller not being realistic during the negotiation or expecting deal terms for their business sale that the market will not bear.
An investor looking to buy a business needs to be honest with themselves about the process and that genuine work and compromise is required from their end in order to consummate the deal.
- Not ready to take the plunge and go through with the sale. In other words – cold feet.
- Not being willing to compromise during the negotiations.
- Losing sight of the big picture. Sometime bickering over relatively small amounts of money can ultimately cost much more in the long run due to lost goodwill.
- Taking advice from advisors that is subjective in nature. Sometimes advisors offer opinions on business sales and these opinions may come from a group of people that are not entrepreneurial in nature. It is important to heed professional advice but temper that advice against ‘opinion’ that may be unsubstantiated.
- Not work hard to get the deal done and not show good faith. Buying a business for sale takes work. Deadlines must be met, obligations fulfilled, etc.
