5 Common Deal Killers to Avoid When Selling Your Business

Some of most common M&A deal killers we see are time delays, inexperienced advisors, surprises in due diligence, unassignable contracts, and fear of the unknown. Cue up the scary Halloween music. When selling your business, you can expect to hit a few snags before the deal is complete. But proper planning can help you avoid the most common “deal killers” like these:

Deal Killer 1: Time Delays

We have a saying in the M&A industry: “Time kills all deals.” The longer it takes to complete negotiations and due diligence, the more likely a deal is to fail. Deal fatigue is real, and small issues that weren’t a problem at the start of negotiations can become sticking points as a transaction drags on.

Avoid deal fatigue through preparation and focus. Organize financials and other business information before you go to market, and work with advisors who will give your deal the attention it requires.

Related Article: How Delays When Selling Your Business Can Lead to Deal Failure

Deal Killer 2: Inexperienced Advisors

When it’s time to sell your business you need specialized M&A advisors. This is not the time to use your regular corporate attorney who has no M&A experience, for example.

Inexperienced advisors are learning on the job, which slows down the process. They can get ultra-conservative or pick the wrong fights because they simply don’t know what they don’t know.

Related Article: How M&A Strategy Leads to a Successful Sale

Deal Killer 3: Surprises in Due Diligence

We have another saying in our industry: “Go ugly early.” When selling your business, be up front about any issue areas right from the beginning.

Later on, when the excitement has worn off and everyone is dealing with tedious details, that’s when problems can become … problems. Buyers who uncover issues later in due diligence are more likely to respond with price adjustments and greater scrutiny. They may even back out of the deal.

Related Article: What is M&A Due Diligence?

Deal Killer 4: Unassignable Contracts

To the best of your ability, ensure contracts (e.g., leases, employee non-compete agreements, customer agreements), are assignable in a sale. Third-party contract negotiations can destroy confidentiality and create an opportunity for someone to hijack your deal – demanding unreasonable terms or conditions because they know your sale hinges on their agreement.

Deal Killer 5: Fear of the Unknown

It’s an investment banker’s worst nightmare: a client who gets cold feet and cancels the deal at the last minute.

Letting go of a business is hard, and some sellers aren’t emotionally ready for the transition. As final negotiations are underway, they might start dragging their feet or asking for unrealistic terms.

When it’s time to sell, you don’t want to be walking away from your business. You want to be moving toward something meaningful.

How to Avoid these Deal Killers

To prevent these deal-killing pitfalls, prioritize thorough preparation, engage experienced M&A advisors like our the Walden team, maintain transparency throughout the process, and ensure all contracts are assignable. By addressing these critical areas, you’ll pave the way for a smoother, more successful transaction.

Don’t allow the sale of your business to turn into a horror show! Avoid these “deal killers” and you won’t just survive a transition, you’ll come out the hero.

Are you considering selling your business? The sooner you bring in an advisor, the smoother the M&A process can be. Contact Walden below to start planning.