Deal Busters

John Foster, Business Intermediary

There can be many reasons why business broker deals fail. It is estimated that nearly 20% of all M&A deals don’t close AFTER an APA or SPA is inked. Samuel Howard of Axis recently highlighted four of the main reason why deals don’t ultimately close:-

Valuation – Buyer and Seller ultimately can’t come to terms with each other’s valuation metrics. It’s important that buyer and seller both have some agreement on valuation metrics before deep drawn out due diligence.

Deal Fatigue – Patience is a virtue but a long drown out date between buyer and seller can kill a deal. Making sure things keep moving forward is a business intermediary’s job.

Due Diligence Skeletons – As an intermediary, we try to find these skeletons in the closet before buyers do. Nobody likes big surprises during due diligence and finding them give buyers an excuse to end the process.

Cultural Misalignment – Sometimes buyers look for bad inter-company culture and figure they can “fix” this as a best practice they can bring to the party. In larger transactions however this can be a deal breaker.

Of course there will often be significant bumps in the road as buyer and seller move toward a close. As a professional intermediary, one of my jobs is to minimize the risks of deals falling apart!