What are the most common reasons a deal does not close?

The main reason transactions are not completed is due to weakening financial performance. If the financial performance of a business starts to deteriorate and falls below what is being forecasted, the business will typically decline in value and a prospective buyer starts looking harder at the business for other signs of weakness. We always emphasize that the seller should continue to run and grow the business as if the business was not going to be sold.

Another reason deals fall apart is when a buyer is conducting due diligence and finds errors or discrepancies that were not disclosed. During due diligence, everything comes out about your company– good and bad. It is important that we are honest with the buyer throughout the process and declare any problems up front. The buyer needs to believe that we have been clear and honest throughout the sale process, and typically a problem disclosed up front does not obstruct a deal. But surprises during due diligence can cause lack of trust to kill a deal altogether.