What does it take for the sale of a business to close successfully? Aside from catastrophic events such as a fire or a natural disaster, deals fall through because of the people involved. Here are some examples of how a sale closes successfully.
Buyer and Seller Are in Agreement
Often the buyer and seller are not in agreement, or do not understand the terms of the sale. The sale can fail somewhere along the line if an offer to purchase is too vague, or has too many loose ends. There is a much better chance for the sale to close if you take care of the loose ends before the offer to purchase. The agreement should specifically spell out the details of the sale. A lot of information and answers are supplied prior to the offer. This means answering many of the buyer’s questions before the offer is made. The seller may have questions about the buyer. There may be questions about the buyer’s financial qualifications or their ability to operate the business. Address these concerns prior to the offer or make them a part of the offer. Both sides need to understand what to do and when. The key to a successful offer to purchase is that both sides completely understand the terms and are comfortable with them.
Buyer and Seller Don’t Lose Their Patience
The buyer and seller need to realize that the closing process takes time. There are many details to address for the sale to close. Make sure that the outside advisors are deal-oriented. The parties should insist that the deal works. The buyer and seller should understand that the outside advisors work for them. Most decisions concerning the sale are business related and are decided by the buyer and seller themselves. The buyer and seller should try to keep to the scheduled closing date. They also need to understand that the closing process does take time.
No one likes surprises. The seller needs to be up front about their business. Buyers understand that nothing is perfect. Reveal problems at the start of the process because sooner or later they will be exposed. For example, both the buyer and seller should consult with their accountants about any tax implications prior to going to market. If financing is an issue, it should be mentioned at the beginning. If all concerns and problems are dealt with initially, the closing will be just a technicality.
The buyer and the seller must feel like they got a good deal. If they do, the closing should be a simple matter. If the chemistry works, and everyone understands and accepts the terms of the agreement, and feels that the sale is a win-win, the closing is a mere formality.