Portland Business Broker Thoughts

A friend of mine who has been involved with many large private company and public company mergers and acquisitions shared with me some very relevant advice a few years ago:  “Time kills all deals.”  His point was that no mater how motivated both a buyer and seller are, if enough time passes after a buyer becomes interested in a business but before it closes, the deal will die. My experience has been that he is correct – business sale transactions, are, indeed, fragile.

So what happens that can cause a deal to die despite an initially motivated buyer and seller?  Here are a few examples:

• The financial performance of the business changes.  This can be either an improvement or a decline in the business.  If it is an improvement, the seller may no longer be willing to sell for a price and terms that the buyer is willing to pay.  If it is a decline in performance, the buyer may be nervous that the business will trend downward and may become uncomfortable with moving forward, or may try to renegotiate price.
• There could be a change in the buyer’s ability to fund the deal.  A buyer’s investment that went awry, other more pressing cash needs, or a lending relationship that soured could all result in a buyer having less capital available than anticipated.
• A shift in the market, economy, or either the buyer or seller’s industry could impact a buyer’s strategic and investment goals.
• A more attractive opportunity may be discovered by the buyer.
• Deal fatigue.  Buying or selling a business can be a very time-consuming, stressful, and distracting activity.  Over time one or both parties could decide that doing a deal just isn’t worth it.
• Unexpected litigation, a claim, or another significant problem could arise for either the buyer or seller.
• The death or ill health of either the buyer or seller.
• Passage of new regulations or laws that could impact the business.

The best way to handle the risk of time killing all deals is preparation.  At Codiligent business brokerage it is my aim to make sure that we have prepared as thoroughly as possible for the sale before a business is actively marketed.  This way, when we do receive an offer, we aren’t usually causing delays by waiting for significant information requested by a buyer.  A business owner can help avert this problem by making sure that they are highly responsive to requests for information from the broker and buyer.