Three reasons why business sales fall through

Getting your business to the point where a suitable purchaser has been found and the terms have been agreed is usually the first point at which vendors allow themselves to breathe a small sigh of relief.

If you’ve never been through the sales process let me assure you that it really is a significant milestone but in reality it is not the finishing line, whatever you heart wants you to believe.

In fact it is often some distance off, but nonetheless a fairly good indicator that the marathon is approaching its end and you’re going to make it. At this point it’s usually a case of the buyer performing due diligence and wrapping up handover and post-sale details, and in reality most sales will proceed unimpeded and on time.

However, before a retiring business seller can truly relax, look themselves in the mirror and afford themselves a smug but well-earned smile of satisfaction numerous pitfalls may still be lurking beneath the surface like a crocodile, poised to take you by surprise. Some of them are totally beyond your control and emanate entirely from the buyer’s side, some of them may be events in your own life that were unforeseen, but there are others that are entirely preventable and it is your fault for allowing them to happen.

If this sounds blunt I make no apology because sometimes you have to say things like they are in order to maximise impact. After all it is for your benefit as a business seller that I am going to open your eyes to three common reasons ( but not the only ones ) why the deal you have dreamt of and eagerly anticipated for months or even years is about to unravel before your eyes and you’ve only got yourself to blame as you look on helplessly in desperation as that sinking feeling slowly deflates your confidence and it dawns on you that you are going to have to start meeting prospective buyers all over again, like a game of snakes and ladders.


Some people prefer to label it as “baggage” but to a buyer it is made of bones, is white and scares them witless – it is a skeleton, plain and simple. In reality it is the shock of opening the door and watching helplessly as the bones lurch outwards that gives people such a fright, but what if they knew to expect a surprise? It wouldn’t be a surprise, and that matters a lot!.

Whatever it is that you are failing to disclose was probably a historic event, perhaps a former partner being struck off, a member of staff imprisoned for embezzlement of client funds, a disciplinary matter or you yourself being wrongly accused of something publicly. Either way, you weathered the storm at the time so why won’t you weather it now when coming clean with the buyer?

Of course, there is certainly more than just a theoretical risk when making a full and frank disclosure at the time of sale and exactly when to bring it up requires careful consideration; too early and you’ll never see the buyer again, too late and the last you’ll ever hear of them is the sound of a phone being put down. But balance all this against the fallout of not making disclosure and the buyer finding out – all trust will immediately evaporate and if you are tied into a service contract or awaiting a final payment it isn’t going to be pretty. Even if you do nothing and think you’ve pulled it off, if the business runs into trouble the discovery could well come back to bite you, however robust your contract drafting may be.

So, it’s down to timing but that’s where a face-to-face meeting, perhaps with the sales broker present, is your strongest gambit – if everything else is going swimmingly an honest unprompted disclosure is unlikely to derail a deal, and in fact is likely to strengthen trust.


For many employees the sale of their employer’s business can present a golden opportunity to “get even” or extort concessions. In some businesses the staff spend half their time wondering when the boss is finally going to retire so that the element of surprise may be taken out of the equation but often it is going to come as a bolt from the blue and they will quite rightly worry about their futures, and if mismanaged can rapidly become “each man or woman for themselves”.

Careful planning needs to go into who to tell what and at which stage in the process. But of course it all depends on the circumstances. If they are in line for a windfall it is much easier to keep them sweet and co-operative and in any event senior or trusted employees need to be made aware of your plans and kept up to speed more than others. If you treat the sale like a state secret something is bound to go wrong just when you don’t need the headache. It simply means that you need to think your tactics through most carefully and build in flexibility and quick answers because more often than not excluded staff will work it out or there will be a leak, even if unintentional. There may be pay, promotion or disciplinary issues that are simmering just below the surface, so prior to commencing the sales process it is advisable to tackle these issues head-on with a sustainable and meaningful result that defuses the matter and neutralises “bad apples”.

A trickier issue is the need to modernise when staff are reluctant bordering on Luddite, but as they say, “if you want to make an omelette you need to break eggs”. As above, the time to confront people is before the sales process commences because unlike men’s toothache it doesn’t just go away. However tricky it is in advance it has the potential to be infinitely more damaging during a sale.


You have a very profitable business but your cash generation is lousy. Usually it’s because the tail is wagging the dog and your customers have you round their little finger because you are a softie and haven’t got what it takes to “demand” your money; yes, it is your money as you’ve earned it fair and square. Then again it could simply be because your business is inefficient and nobody deals with chasing debt. An accumulated debtors list that is even 30% of last year’s turnover is going to scare off a buyer for the simple reason that when they take over and ask for payment on demand or monthly instalments these customers are likely to turn on their heels.

So, it is up to you to train them in advance that bills need paid. One proven way to manage old debt is to ring fence it and perhaps offer a hefty discount for immediate settlement. It works in tandem with implementing a robust and workable method for collecting ongoing turnover. It isn’t necessarily easy and of the causes of failure it is probably the most difficult to tackle as it impacts directly on your client relationships and takes much time and energy to get right but with the right advice, support and attitude it is definitely achievable.

You may choose to decide to do nothing about the above potential deal breakers and you may well pull it off, especially if a buyer fails to perform adequate due diligence or perhaps their desire for your turnover outweighs any other consideration. Perhaps you’ll take a calculated risk, although few if any professional advisers would counsel thus, but it’s not their future, it’s yours. Ultimately it all boils down to a single question – “how lucky are you feeling today?”.

If you’re thinking about selling your business why not give us a call for a free chat, even if only to put your mind at rest – we’ll even pay for the call! Call us for a no obligation chat on 0800 012 14 16 or email us

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