Contact Us

Selling a Business: Why do sales fail to complete?

Holding a Deal Together

Holding a Deal Together

It is not uncommon when selling a private company for a deal to fall apart after an offer has been accepted. In this article an experienced UK business broker explains why this happens, and how to stop it happening to you.

When selling a private company offers to buy a business that fail to progress to a completed sale are serious time and money wasters for buyers, sellers and their brokers alike. So why does it happen? There are predictable reasons offers fall apart when selling a business, and once understood, many of the worst deal-breakers can be avoided. Understanding is the key word. Both the buyer and the seller must develop an awareness of what the sale of the company involves, including facing potential problems and addressing them before they sink the sale.
What Are The Most Common Things That Sink A Sale?
The Seller Has Hidden Problems

Hiding problems does not mean they have gone away. Most buyers will do a thorough due diligence and inevitably any problems come to the surface. Buyers hate unexpected bad news, and it invariably leads to a severe case of cold feet. In our experience most problems can be managed with buyers if they are disclosed early in the sale process.

The Buyer Has Second Thoughts About the Price

This happens most often when the seller has set an unrealistic selling price. An inexperienced buyer might make an offer at the full asking price, but when the buyer’s professional advisors and lenders become involved they suggest the offer price is too high.

Second thoughts on value also happen if after initial due diligence the buyer comes to the conclusion that the realities of the business do not support the offer price. If the reality of the business does not support the offer price the deal will inevitably fall apart.

The best way to stop either of this situations happening is for the seller to have sensible price expectations at the start of the process.

Both Parties Become Frustrated by the Pace of Progress

Both sides need to understand that getting to the close takes time, but it shouldn’t take so much time that the deal is endangered. Deals run more quickly when both sides are using advisers that specialise in company sale contracts. The seller or the buyer may be tempted to use a lawyer or accountant they know well, but they may not have the experience to bring the sale to a successful conclusion.

The Buyer and Seller Had Different Understandings of Their “Agreement”

Unfortunately, there are business sale transactions where the buyer and the seller realize late in the process that they have not been in agreement at all – they just thought they were. A professional business broker will document the deal thoroughly and make sure both sides know exactly what it entails. This reduces the risk of misunderstandings.

The Seller Has a Change of Heart

Selling a business has many emotional ramifications. A business often represents the seller’s life work, and underpins their standing in the community. This can lead to cold feet as the prospect of “retirement” becomes a reality. Some sellers enter the marketplace just to test the waters – to see if they can get their “price”. Experienced business brokers generally can tell when they encounter the casual (as opposed to serious) category of seller, but this is more difficult for the inexperienced buyer. In our experience keen sellers show energy for the process, are open to communication and reviewing options with the buyer, and respond quickly to requests for more information. If these things are not happening it may be time to move on to the next target.

The Buyer is Slow to Move Things Forward

What’s true for the mixed-emotion seller can be turned right around and applied to the buyer as well. Buyers can enter the sale process full of excitement and optimism, and then begin to drag their feet as they draw closer to the “altar.” In our experience serious buyers will be pushing the seller to move forward and prepared to commit expenditure on accountants and lawyers. If these things are not happening it is time to move onto the next prospect.

Here are some of our other postings on similar subjects.

Selling a Company:  Making sure the deal goes through.

Selling a Business: Positive signs that a deal will complete.


If you are interested in finding out more about these and other issues relating to the sale of a private company one of our business sale experts would be delighted to talk to you in complete confidentiality. Click CONTACT ME to book an initial phone conversation or call us on 01604 432964.

We welcome comments on posts, and questions from our readers. Use the “Leave a Reply” box below. We answer all reader questions within 24hrs. If you would like to be informed about new posts on the theme of selling a private company click the “Subscribe” button at the right hand side of this page.

Leave a Reply

Your email address will not be published. Required fields are marked *


* Copy This Password *

* Type Or Paste Password Here *

24,908 Spam Comments Blocked so far by Spam Free Wordpress

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

back up ↑