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The top 15-and-a-half deal killers when trying to sell a business

'The Road Beyond – What Nobody Tells You About Selling A Midsized Business' is available at

From being untruthful to having insufficient financial records to an out-of-control buyer or seller, there are many ways for the sale of a business to go sour.

(Editor’s note: The following is an edited excerpt of “The Road Beyond – What Nobody Tells You About Selling A Midsized Business” by Achim Neumann, president of A Neumann & Associates LLC.)

From being untruthful to having insufficient financial records to an out-of-control buyer or seller, there are many ways for the sale of a business to go sour.

Here are 15½ deal-killers:


This is probably one of the most significant failures by a seller. Lack of valuation, lack of professional marketing documents, missing financials or lack of properly defining the reason for the sale will leave any buyer with the perception of an unmotivated seller – resulting in low-price offers. After several low offers, the seller will start to believe the business is worth little money and sell at an under-par price.


The lack of a qualified deal team approach – or even worse, the lack of any team approach – will leave the seller to perform all tasks alone. This has a massively negative effect on business performance during the transition period and also leaves the seller scrambling to find good advice once an offer is received.

Every owner needs to receive good feedback during a transition. The lack of a qualified team will lead to poor decision-making, often with far-reaching consequences.


Transactions in small to mid-sized businesses must be kept confidential. The circle of employees in the need-to-know realm should be limited to an absolute minimum, if any. A breach of confidentiality will lead to a significantly worse negotiation position.


Choosing a nontransaction attorney for a sale is somewhat comparable to having an urologist perform a heart transplant. Worse yet, hiring the recently graduated daughter-in-law as an attorney will both undermine a transaction and likely result in many Thanksgiving meals without the son and his wife.

A third scenario is the over-eager, junior transaction attorney solely focused on protecting his client. This will run up large legal bills and jeopardize the closing.


A lack of good financial reporting systems that provide profit and loss, balance sheet and cash-flow projections within 10 days after month’s-end will be viewed negatively by buyers. In worst-case scenarios, buyers will interpret the lack of financials as an attempt to hide bad news.


No owner will be able to go through with a deal without having a fairly good idea how he or she will spend life after the deal is done. It will be very challenging for any owner to detach emotionally from the business without a clear vision of the future.


Setting a price too high, or lacking a proper valuation to support a high price, will turn off buyers very fast. Buyers will view the seller as highly unprepared and sense a fishing expedition – that the owner really does not want to sell.


A business that mostly depends on an owner’s presence will leave buyers highly skeptical of a successful transfer. Common outcomes in this situation include deal structures with a high percentage of earnouts tied to the business’ future performance when the seller is no longer steering the bus. For this reason, dependency will have a significant impact on the deal structure and how much cash the seller obtains at closing.


Once someone has decided to buy, any delay or hesitation on part of the owner is perceived as unwillingness to sell. This is extremely dangerous for the seller, given that the buyer most likely has experienced similar situations in the past.


All presentations and documents for the sale should paint a truthful picture. The sale – regardless of all due diligence, agreements and warranties – is ultimately based on trust between two parties.

No party wants to enter into an agreement to find out subsequently that information was grossly misrepresented. Once trust is lost, it’s virtually impossible to bring a deal back on track.


It’s the bad times that often trigger the desire to sell. However, these are times when buyers have little motivation and will severely discount offers.

Similarly, this also applies to seasonal businesses. Sellers want to keep the businesses until the season is concluded (and all cash has been harvested), whereas buyers only want to buy at the beginning of the season.


Granting a buyer the right to perform due diligence before he or she submits a written offer surely will result in a failed deal. A buyer requesting 10 years of past tax returns is not only missing the point of due diligence but also needs a significant amount of managing by an adviser to follow the process all the way to closing.


Sellers who let their attorneys or accountants call all the shots will never close. By its nature, any deal includes a certain degree of risk for either party.

Neither an attorney nor accountant can completely mitigate such risk, but both will never fail to point out such risks. If the seller cannot overrule advice when necessary, it’s unlikely the seller ever will close.


In the best-case scenario, the seller also is the landlord. Or, at the minimum if not the case, the seller has a transferable lease. If not, a fourth party enters the process: buyer, seller, bank and landlord.

The owner should attempt to have a transferable lease in place that makes the business the lessee, not subject to landlord’s approval in case of sale.


Every sale is vastly different than what an owner experiences daily in managing the business. A sale or transaction will impose considerable stress on an owner, more so if preparation was insufficient.


No deal is ever done until agreements are signed and monies have changed hands at the closing table. Period.

The merger and acquisition mantra is that a deal will die three times before it’s a deal. Caution: Some deals die more often than that.

Achim Neumann is president of A Neumann & Associates LLC, a mergers and acquisitions adviser and business brokerage firm in eight states, including Pennsylvania, that is affiliated with national networks of qualified investors and sellers. He can be reached at

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