Video 21 – What Are The Most Common Business Sale Deal Breakers?

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host:

So common deal breakers in the transaction?

Mike:

Yeah. I mean, there are lots. But I think the one that does come up very often is… I guess one of the reasons a seller will come to us to assist them in this process is so they can remove themselves from the mix. For us, this is a job. It’s a very well-walked path. We’re very experienced at what we do. We understand the process very, very well. But more than that, we’re not emotionally attached to the detail. And there’s a significant part of negotiation in every transaction that we do. And that’s often where a deal can fall over.

host:

Yeah.

Mike:

And you’d be amazed at the limitations of those negotiations and the potential impact. I can think of a transaction in the last six months where a two-and-a-half million pound transaction almost failed on $15,000 pounds worth of fees. And you would have thought that a reasoned person would consider that to be diminished in the big scheme of things. But where emotions come into that, if the seller were negotiating that themselves, I’m quite convinced that that transaction would have failed.

host:

So a two-and-a-half million transaction. What did they want at the outset?

Mike:

Aah, $1.2.

host:

$1.2. So we added $1.3 million and they were quibbling about $15K.

Mike:

Yeah.

host:

Go figure. Steve?

Steve:

I think the danger with vendors trying to do it themselves is, things too quickly and too easily become a, “point of principle.” It’s not a point of principle, it’s a commercial thing that has to be resolved. So us being the buffer between the acquirer or the investor and the vendor can actually help to diffuse that.

Steve:

For me, in terms of deal-breakers, actually there’s one set of words I dread when you’re in, typically in due diligence with a client, which can be the deal breaker. And it’s actually the words, “Oh, didn’t I mention that?” And that’s down to surprises. So if there’s one thing that I would characterize that can be the kiss of death to a transaction, it’s a surprise coming out during due diligence. Which is, again, why…

Mike:

[inaudible 00:00:02:13].

Steve:

Things that need to be disclosed should be disclosed.

host:

What, business amnesia?

Steve:

Yes. Absolutely, yeah.

host:

Mike, one quick one? Oh.

Steve:

So buyers and investors hate surprises at the last moment.

host:

So do we.

Steve:

Yes. I agree.

Mike:

Yeah. No, I’d agree with that, wholeheartedly.

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Alternatively, If you would like to discuss a potential business sale with one of our Client Directors, please either call Amanda on 0118 959 8224, email agale@evolutioncbs.co.uk or Make An Online Enquiry.

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