What Are the Top Deal Killers When Selling a Business?

While business owners may feel a sense of relief after finding a buyer, that’s typically only half the battle. There are several deal-killers when selling a business that can still stand in the way of a successful transaction.

5 Common Deal-Killers to Watch Out For

Even if you have a great business, strong buyer interest, and a promising deal in place, you need to be prepared for the possibility of your sale still falling through. While some deal-killers are preventable, others are out of your control and can arise unexpectedly. Don’t let this discourage you, though—learning about these potential deal-killers will help you stay as prepared as possible. Here are five common ones to be aware of.

1. Pride Gets in the Way

Of course, you should be proud of your business and the hard work you’ve put into building it. However, an overabundance of pride can also cloud your judgment and affect your transaction. For example, setting an unrealistic sale price without a professional business valuation—or ignoring a valuation you don’t agree with—can scare off potential buyers and prevent serious interest from forming in the first place. When you do secure a buyer, don’t let pride get in the way of negotiations. It’s important to be professional and realistic about the purchase price, deal terms, and overall business details so the buyer can trust you and feel confident moving forward.

2. Buyer Funding Falls Through

There’s no deal without funding! If a buyer can’t secure the necessary capital, the transaction simply can’t happen. This not only includes issues with financing but also problems with the buyer’s cash availability. Over the past couple of years, many buyers in the main street and lower middle market have used cash at close. However, if their cash flow situation changes or they face unexpected financial hurdles without backup funding, the deal can quickly fall apart. The same idea applies to buyers who rely solely on financing.

3. Poor Financial Documentation

If your financial records are incomplete, inconsistent, or disorganized, it can raise serious red flags for the buyer. Make sure to keep your financial statements up to date and well-organized to avoid any doubts about the financial health of your business. This is always important but especially crucial when dealing with more sophisticated buyers, like private equity firms, who have a close eye for details.

4. Sudden Changes or New Information

If a buyer uncovers something unexpected about the business, its finances, or its operations, it can raise doubts about its stability. That’s why it’s important to be transparent with buyers throughout the entire sale process. Doubt can also arise if something unexpected happens within the business—such as a sudden drop in revenue or the loss of a key customer.

5. Buyer Fatigue

Selling a company is a complicated process that can be stressful for everyone involved. If the deal drags on for too long, it’s possible for the buyer to lose interest or confidence in the opportunity. Prolonged negotiations, delays, or lack of communication can create uncertainty, making the buyer second-guess their decision and potentially walk away from the deal. For small businesses, where the transaction is often more personal, delays or lack of communication can be even more damaging to the buyer’s perception.

How to Maximize Your Chances of a Successful Sale

There’s always a slight chance that obstacles completely out of your control will arise when selling your business—but professional guidance can make all the difference when navigating those challenges. Sunbelt Business Brokers has a team of experienced brokers who specialize in the sell-side and are ready to guide you through every step of selling your business. Find an office near you to begin your journey towards a successful sale.