What Can Make a Deal Fall Apart?

It goes without saying that from time to time, deals do fall apart.  However, when both buyers and sellers understand potential pitfalls, they are more likely to be overcome.  Let’s take a look at some of the more common reasons why this happens.  The following is a compilation of factors taken from a survey of business brokers across the United States.

The Seller Doesn’t Reveal Problems 

In some cases, a seller simply is not upfront about problems facing the business.  These issues do show up later, and this often occurs after a tentative agreement has been reached.  The buyer ends up getting cold feet and the deal falls apart.  The way to solve this issue is that sellers must be upfront about any negative aspects facing the business.  Ar Provest, we attempt to ferret out problems at the beginning of the process; there are steps that can taken to overcome these issues.

Second Thoughts About the Price 

Another reason that can cause a sale to fall apart is when a buyer agrees on a price, and then decides that the business doesn’t support the price.  When a seller wants more money than a buyer is willing to pay, the deal will fall apart.  The way to remedy this situation is to ensure that businesses are fairly priced.  The seller’s documentation must support his or her claims so that the buyer can see the facts on paper for his or herself.

Time/Growing Impatient 

In our experience the number one “killer” of deals is time.  The selling process can often take longer than the buyer and seller would like.  As a result, the parties can often grow impatient.  When buyers continue to ask for information, sellers can grow frustrated.

When the buyer and sellers choose outside professionals to work with, it is essential that they have experience closing a deal.  At Provest we can  can help you to assemble a competent team of professionals to accomplish your objectives.

Lack of Agreement 

In some cases, the buyer and seller think they are in agreement, but in actuality, there has been some sort of misunderstanding.  These types of communication issues can be fatal to a successful closing.  Again, a professional business broker can assist in this situation, as brokers are is skilled in making sure that both sides know exactly what the deal entails.  The chances for misunderstandings are then reduced.

The Seller Is Resistant to Selling

Believe it or not, many sellers actually don’t want to sell their businesses.  While the idea sounded good on paper, the seller has an emotional reaction that prevents the sale.  After all, a business is often a seller’s life’s work.

Sellers need to make a firm decision before going to market with the business.  Any doubts need to be resolved before the process begins.

Or…the Buyer Doesn’t Really Want To Buy 

What’s true for the mixed-emotion seller can be turned right around and applied to the buyer as well. While buyers can be extremely enthusiastic at the beginning of the process, they can start to change their mind.  Buyers will often start to realize that their “dream” will actually require long hours, hard work and even an element of risk.

And Other Situations Too 

Above we have detailed the top situations where a deal falls apart.  However, there can also be problems beyond anyone’s control.  For example, Acts of God or environmental issues could intervene.  At Provest Properties, we firmly believe that potential dealbreakers can be dealt with prior to the marketing of the business.  This ensures that the sale will close successfully.  We strive to ensure that both buyer and seller feel they are involved in a good deal and that there is a mutual understanding of the agreement at hand.