Why Deals Don’t Close

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Sellers

· Sellers don’t have a specific reason for selling.

· Sellers are testing the waters to check the marketplace and the price. (They are similar to the buyer who is “just shopping.”)

· Sellers are completely unrealistic about the price and don’t understand the marketplace for their business.

· Sellers are not honest about their business or their situation. The reason they want to sell is that the business is not viable, revenues are declining, possible environmental problems, new competition is entering the marketplace or some other serious issues that the seller has not revealed.

· Sellers don’t disclose that there are more than one owner and they are not all in agreement.

· Sellers have not checked with their outside advisors about possible financial, tax or legal implications of selling their business until an offer is presented.

· Sellers are unprepared or misinformed about providing seller financing to complete a transaction. This is key since according to a recent WSJ survey, up to 90% of closed transaction involved some form of seller finance.

Buyers

· Buyers don’t have a valid reason to buy a business, or the reason is not strong enough to overcome the fear of purchasing a business.

· Buyers have unrealistic expectations regarding the value/price, appropriate terms, the buying process, and how family-owned businesses operate.

· Buyers aren’t willing (some of them) to do the work necessary to own and operate their own business.

· Buyers are influenced by a spouse (or someone else) who is opposed to the purchase of a business when that person is not informed on what is being purchased.