Many deals do not happen even after there is an agreement as to the price, so it is important to anticipate potential deal breakers and prevent them from occurring. Examples include:
- Due diligence uncovers an undisclosed material fact that should have been disclosed.
- Seller has higher than anticipated taxes.
- Seller has second thoughts about selling.
- Because information is slow in getting to buyer (most likely because it was not prepared beforehand), the buyer walks away.
- Buyer cannot finance the deal.
- The buyer and seller do not get along.
- The details of the definite purchase agreement contain unacceptable details. These may include: reps and warrants, collateral requirements for note, and personal guarantee requirements.
- The actual financial results for the quarter/month right before closing are not as good as expected; consequently the buyer gets cold feet and withdraws.
- Professional interference (Ex. Seller’s CPA may lose a long term client if client sells.)