There are multiple reasons why the sale of a business won’t go through.  Key problem areas we will look into today, include the seller, buyer and third parties.



What is the seller’s motivation to finalize a market priced deal?  Are they motivated to agree to reasonable marketplace terms in a timely fashion or are they just testing the market?  Are all shareholders aligned with this seller? Time kills deals. Know the Seller’s “why”.

Some sellers fail to be honest about their business or its situation.  Ensure that proper due diligence of the business operation is completed.  Sellers should disclose all known material facts that could affect the business.

Sellers should check with their licensed tax and professional legal advisors prior to entering into any purchase agreement.  Sometimes the agreed to terms have added tax consequences and liabilities that can cause the seller to request modification of agreed to terms or to get out of the agreement.



What is the buyer’s motivation and experience to finalize a market priced deal?  The buyer may not have an urgent need or a strong desire to go into business.  Are they looking for a fire sale only or a fair market priced business?

Some buyers have very unrealistic expectations regarding the experience and time commitment required to run this type of business. Landlords and lenders care about relative business experience and financial profiles.


Third Parties

Lenders want to ensure their investment is protected.   The lender qualifies the buyer and the business.   Prior to entering into a purchase contract, ensure you know the pre-screened business terms that the business supports for well qualified buyers by requesting to see the SBA lender’s letter of support for this business. Sellers should also request to see the buyer’s lender letter of support that shares the general business purchase terms this buyer was prescreened for.

Landlords may become difficult about transferring the lease or granting a new one.  They want to ensure the buyer has adequate experience and a financial profile that will support a long-term tenancy in good standing under the projected economic outlook.  Start this process as soon as purchase is agreed to.   Ensure the lease agreement terms are agreed to as a contingent term of sale, prior to opening of escrow.

Ensure you have successful business-transaction experienced attorneys and CPA’s.  Ones who are reasonable deal-makers, not deal breakers.


Business brokers are aware of the various ways a deal may fall through.  They are experienced in resolving issues before the business goes onto the market or before a buyer is introduced to the business.  Although business brokers cannot provide legal or tax advice, they are familiar with the intricacies of the business sale and can help quarterback the deal to successful closing.



John LaMay is an Advisor with Sunbelt Business Brokers. He can be reached at (408) 436-1900, x 105, or at [email protected]