Don’t let Deal Fatigue damage your business sale

dreamstimefree_fatiguedSo you’ve found a great buyer, agreed terms and instructed lawyers.  Big sigh of relief! The worst is over. What could possibly go wrong?

Without wishing to put a damper on things, one common reason for deals going wrong during Due Diligence is “Deal Fatigue”– where the buyer (and sometimes the seller) runs out of steam during the process.

Poor preparation is often the cause as it makes for a longer due diligence period which in turn makes deal fatigue more likely.

If key information and documentation, such as contracts or accounts, aren’t readily available or either party doesn’t respond to queries in a reasonable time the period of due diligence will take longer (and cost more) making deal fatigue more likely.

Another reason is surprise – unpalatable facts that you’ve not disclosed to your advisers. An example might be a legal claim that has lain dormant for a while or a customer complaint ignored and now escalated. This causes the buyer to question other information and destroys trust, leading your buyer and his advisers to question other information you’ve provided. It’s never worth hiding unpalatable information because it will, invariably, come to light in due diligence.

Be aware though that surprises can come from the buyer – like deciding to focus on a different acquisition and defer yours – even more likely if its taking too long to get the deal over the line!

The more momentum you, and your advisers, can keep in the Due Diligence process, the better your chances of reaching a successful conclusion.

 

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