Why Business Owners Back Out Of Selling Their Business Last Minute
Why You Might Change Your Mind About Selling Last Minute
Selling your business is typically the biggest decision of an entrepreneur’s life, and there are plenty of reasons an owner will back out of a transaction if it’s not what they need for their personal and professional goals.
Below, Advisors and M&A professionals from the BizNexus community offered their tips for owners hoping to move towards an eventual exit, and avoid the typical pitfalls that can derail a great transaction from taking place.
Family, personal guarantee & life after selling
There are three areas that we focus on with sellers before taking on the listing to avoid them backing out of the deal at closing:
1. Family. We talk about family to make sure that all the key members of the family are on board with the owner selling and that there aren't any family members that would like to take over the business.
2. Personal Guarantee: We review the lease for personal guarantees and determine if the seller will remain personally liable for the new tenant on transfer and if there are any opportunities to remove the guarantee.
3. Plans After Selling: We talk about what their plans are after they sell to ensure they know what they will do with their time.
Working capital adjustments can be deal killers
I have seen sellers simply change their minds because they aren't ready to sell yet. Sometimes it's the working capital adjustment or other factors that affect the price. Lawyers can be problematic when they try to take over the deal and restructure it in ways that the buyer or seller cannot accept.
Reliance on one solo “rainmaker” reduces valuation or kills the deal
My problem has been with owners who are the rainmakers for their business. When they realize buyers really want them more than their business, the deal isn’t attractive.
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