Updated: Sept. 5, 2023

Finding the right buyer for your business is exhilarating. A generous offer comes in, you nod in agreement, and the horizon looks clear.

However, many sellers soon encounter obstacles—often termed "deal breakers"—that threaten the transaction's fruition. In this blog, we’ll explain the various types of deal breakers and how to avoid them.

Understanding Deal Breakers

Typically, these deal breakers emerge during the 'Due Diligence' phase. This phase occurs once a prospective buyer puts forth a Letter of Intent (LOI) and the seller concurs. At its core, due diligence is an in-depth examination where a potential buyer reviews all aspects of the business. This ensures the establishment's authenticity and verifies that all claims by the seller align with reality.

Broadly, deal breakers fall under these sectors:

Financial Obstacles: Arise when buyers scrutinize the financial statements and detect inconsistencies.
Legal Hurdles: Surface when the buyer questions the company's legal framework or finds compliance issues.
Expectation Barriers: Emerge when either party's anticipations don't align, leading to possible dissatisfaction.
Transition Troubles: These fears crop up from potential disruptions post-acquisition, such as staff turnover or client migration.

Strategies to Dodge Deal Breakers

Financial Obstacles: Ensure transparency. A meticulous financial record, preferably reviewed by an accountant, will establish credibility during due diligence.
Legal Hurdles: Engage a legal expert to review all company documents and protocols. This proactive measure will assure potential buyers.
Expectation Barriers: Open communication is crucial. Establishing clear expectations from the onset mitigates misunderstandings later.
Transition Troubles: Design a robust transition strategy that documents the handover process, ensuring operational continuity.

The Criticality of Recognizing Deal Breakers

The value you've instilled in your business can only be protected if these deal breakers are preemptively addressed. They can mean the difference between a fruitful sale and a missed opportunity.

While many entrepreneurs navigate the sales journey independently, partnering with a business broker can be invaluable. These specialists have honed their expertise in sealing deals, and their insights often pivot the transaction towards success.

Ready to dive into the selling waters? Schedule a consultation with our expert brokers and ensure your seamless sales journey.