Deal Killers... And How to Avoid Them

Almost every transaction to sell a business involves a few obstacles to navigate before reaching the finish line. However, careful planning can help overcome many common last-minute "deal killers," including these four:    

Deal Killer #1: Deal fatigue. 

Perhaps you've heard the saying "Time kills deals." Deal fatigue is real, but we believe that "Time kills deals with an unmotivated buyer or seller." Choose a buyer who has the financial wherewithal to acquire your business and the emotional motivation and commitment to make the transaction happen. 

Deal killer #2. Third-party approvals.  

Some deals require third-parties to approve a transaction before it can close. An uncooperative landlord (what, in New York?) or unwilling minority shareholder could crater a deal. Or perhaps your contracts with clients include anti-assignment clauses that require their consent prior to a sale. Don't wait until the last minute to identify and work with third parties whose approval is required.  

Deal Killer #3. Problems in due diligence. 

An important step in preparing your business for sale is to anticipate questions that may arise as the buyer conducts due diligence. Try to overcome any challenges before the sale, or if that's not possible, notify the buyer early in the process. If a buyer uncovers a business problem in late-stage due diligence, be prepared to quickly dig into the issue, explain what happened, and be flexible regarding a fix.

Deal Killer #4. Last-minute negotiations (typically about non-competes, employment contracts, or working capital). 

The best way to avoid any unwanted negotiations late in the process is to ensure the initial letter of intent (LOI) addresses all meaningful aspects of the transaction. It can be tempting to think, "We'll figure that out later," but don't punt on details in the LOI. If the buyer presents an LOI light on details, work through it until it includes a complete overview of the transaction.

Careful planning, clear communication, and a reasonable approach from everyone involved can help overcome these common challenges, and move a transaction across the finish line. 

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